Lords Sitting of 30 November 1994

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Newcastle.
Lord Cottesloe— Sat first in Parliament after the death of his father.

EC Directives: Implementation
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
Whether it is their policy to encourage government departments to add to, improve and generally embellish directives emanating from Brussels.
The Earl of Arran: My Lords, the President of the Board of Trade last year commissioned an efficiency scrutiny into the implementation and enforcement of EC law in the United Kingdom. The efficiency scrutiny found little evidence that the United Kingdom deliberately over-implements directives emanating from Brussels.
Lord Peyton of Yeovil: My Lords, while I mildly agree with my noble friend's Answer, does he understand that there is considerable anxiety that government departments in this country, in pursuance of that well-known love of charity for which they are famous, unnecessarily add to the burdens which the Commission intended to impose both by directives and regulations?
The Earl of Arran: My Lords, of course I would be glad and, indeed, grateful for even half of such gratification from my noble friend. However, I have several points to make in response. First, EC law is very often implemented by means of existing national legislation. The efficiency scrutiny report revealed that existing UK legislation often has much wider scope and tougher penalties than that of other member states. All EC proposals which may impose a burden are subject to what is termed a "compliance cost assessment" at the earliest possible stage of the EC scrutiny process. But I can say that we are pressing for the Commission to improve its business impact assessment system in order to ensure that all proposals for EC legislation are effectively assessed and, more than that, justified before they are tabled.
Lord Stoddart of Swindon: My Lords, is the noble Earl aware that, although his noble friend may be "mildly" satisfied with the Answer given, there are many other people who will not be at all satisfied? Is the noble Earl also aware that some people believe that many good businesses have gone to the wall, including many abattoirs—indeed, I understand that 250 of them have done so—as a result of government embellishment
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of EC directives and over-embellishment by British officials? Will the noble Earl comment on that and also on the book by Mr. Booker and Mr. North entitled The Mad Officials?
The Earl of Arran: My Lords, the noble Lord may take that line, but I can certainly reassure him and say, again, that it is not our policy to over-embellish EC law; indeed, we are encouraging Community efforts to reduce EC directives. When implementing EC directives, it is certainly our policy to ensure that only the minimum necessary burdens are imposed upon businesses in this country.
Lord Harmar-Nicholls: My Lords, when my noble friend says that they do not over-embellish, is he really saying that, to some extent, they do embellish such directives? If one examines the meaning of words, that is the only message that I could get from my noble friend's official reply.
The Earl of Arran: My Lords, I thought that I had made it clear in my original reply that it is not our policy to over-embellish EC law.
Earl Russell: My Lords, can the Minister remember an Answer on Europe which did satisfy the noble Lord, Lord Stoddart of Swindon?
Lord Stoddart of Swindon: I cannot help that if the answers are bad!
The Earl of Arran: My Lords, I think I have to say that I cannot.
Lord Weatherill: My Lords, is there any truth in the rumour that while it is legal to order a pint of beer and a pint of cider it will no longer be legal to order a pint of shandy? Is there any truth in this directive?
The Earl of Arran: My Lords, it would be somewhat invidious to examine individually each of the over 230 directives which have come out of Europe since 1st January 1992; not only would it be invidious, it might be rather time consuming.
Lord Boyd-Carpenter: My Lords, can my noble friend say how one embellishes a directive?
The Earl of Arran: My Lords, I think we are going into semantics here. What I am really trying to say is that we are determined to ensure that, when implementing directives, businesses have the least necessary burdens imposed upon them.
Lord Bruce of Donington: My Lords, is the noble Earl aware that a perusal of the European Community's official journal reveals that there is no diminution in the flood of regulations emanating from Brussels? Will the noble Earl give the House an undertaking that the explanatory notes issued by ministries in regard to proposed legislation are actually read by the Ministers who sign them?
The Earl of Arran: My Lords, I believe that all Ministers read everything that is put in front of them before they put their signature at the bottom.
The Earl of Lauderdale: My Lords, will my noble friend return to his original Answer? He referred to

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over-embellishment; surely over-embellishment includes embellishment? The question is whether embellishment takes place.
The Earl of Arran: My Lords, as I said before, the whole point as regards embellishment is that we do not over-embellish EC law. We are saying that we try to impose the least possible restrictions upon businesses in the United Kingdom. I hope that what I have already said is clear.
Lord Clinton-Davis: My Lords, does not the Minister agree that to speak in terms of efficiency scrutiny in the context of this Government's policy is a massive contradiction in terms? When he refers to embellishment, is he aware that embellishment means a dressing up, a distortion, just as much as other things?
The Earl of Arran: My Lords, I was under a different impression. I thought that embellishment meant the beautification and the beautifying thereof.
Lord Shepherd: My Lords, I should like to put a useful suggestion, perhaps to the noble Lord the Leader of the House. I think there has been genuine anxiety about the way in which legislation that we bring forward through Parliament in response to directives or otherwise from another place seems to be more stringent than in the rest of the Community. Could we not consider sending the proposed legislation to one of our committees which could examine it before it is taken on the Floor of the House, and consider how other members of the Community have themselves implemented it to see whether there is at least a genuine playing field between the various countries in the way domestic legislation has been changed as a consequence of directives from the European Community?
The Earl of Arran: My Lords, again I go back to the point that I hoped I had made clear; that all EC proposals which may impose a burden are subjected to compliance cost assessment at the earliest possible stage in order to see that there is no unnecessary imposition. That is in the interest of all those whom it affects. Deregulation is an equally important matter, not only in this country. It is important to make quite sure that deregulation occurs in Europe as much as it does here and that it is clearly understood and embodied in policy thinking.
Lord Rippon of Hexham: My Lords, whatever the advantages or disadvantages of compliance cost assessment, the Government's attempts to produce a policy, or the meaning of embellishment, I hope the Minister clearly understands that on all sides of the House—I find myself with rather strange allies today—there are grave anxieties of the sort expressed by my noble friend Lord Peyton. Can we have a clear assurance
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that the Government will in no circumstances permit an imposition on the British people of something which is not required under a directive?
The Earl of Arran: My Lords, we have constantly this in mind; we are continually looking at it. The answer to my noble friend's question is yes.
Lord Peyton of Yeovil: My Lords, perhaps my noble friend will examine the arrangements for comparing the construction put upon regulations and directives by other countries with that carried out here.
The Earl of Arran: My Lords, I understand the point my noble friend is making.

NHS: Specialist Units
2.48 p.m.
Baroness Masham of Ilton Baroness Masham of Ilton asked Her Majesty's Government:
Whether patients can be assured of receiving specialist treatment not available in local hospitals, and whether research will continue in the specialist units.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): Yes, my Lords, within the usual constraints.
Baroness Masham of Ilton: My Lords, I thank the Minister for that reply. Is she aware that some health authorities are not sending patients on tertiary referral to a specialised unit when they consider that to be for research? How can clinical research for rare conditions progress if such units do not have patients to work on?
Baroness Cumberlege: My Lords, referrals are a matter for the consultants or the GPs concerned. With regard to tertiary referrals, which are referrals from one hospital to another, no prior agreement is necessary and those are dealt with as the patient's need requires and on the opinion of the clinical doctor involved.
Lord Walton of Detchant: My Lords, does the Minister agree that one of the greatest strengths of British medical research is the ability to carry out multi-centre clinical trials, often involving the treatment of rare diseases? Does she accept that there is now an increasing reluctance on the part of some district hospital managers to refer patients because of the need for extra-contractual referrals to centres of excellence? If the Culyer working party report is to be implemented by government, how do the Government propose to protect the position of these important tertiary referrals to major research centres?
Baroness Cumberlege: My Lords, the Culyer report has been accepted by my right honourable friend the Secretary of State for Health. We believe that it will safeguard and promote the very high reputation this country already has in medical research.
With regard to extra-contractual referrals, we believe that the Culyer report will address many of the issues. It will safeguard the funding for research and

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development, which I believe will please this House which has had such a very strong influence on the future of medical research in this country.
Baroness Robson of Kiddington: My Lords, can the Minister assure us that there are sufficient funds in local authority hospitals and in National Health Service trusts for extra-contractual referrals?
Baroness Cumberlege: Yes, my Lords. Such referrals are a tiny percentage of the total budgets of health authorities, amounting to between 1.5 and 3 per cent. Therefore, it is a very small sum of money. Usually these referrals are very important. Of course, all emergencies are dealt with immediately, but for extra-contractual referrals we no longer require prior approval before a patient is treated or even seen. That is much simpler.
With regard to resources, your Lordships will know that every year we put more funding into the National Health Service, as indeed the Chancellor did yesterday in the Budget.
Baroness Jay of Paddington: My Lords, can the Minister tell us whether the number of extra-contractual referrals across the country is going up or down? Is it not the case that the NHS market has almost created a Catch-22 situation in which, if the number of extra-contractual referrals goes down, the number of patients receiving specialist care is reduced, but if it goes up the ability of purchasing health authorities to keep within their budgets is also reduced?
Baroness Cumberlege: My Lords, for the very highly specialised units which in the past have had to rely on extra-contractual referrals we have instructed health authorities and regions that in future they should not use that system but should co-operate with one another so that there is a critical mass which is large enough to support these highly specialised units. Therefore, we are working away from the present system of extra-contractual referrals.
The Countess of Mar: My Lords, is the noble Baroness aware that in the case of people who are or who believe they are suffering from organophosphate poisoning there are particular difficulties? Is she aware that they are being refused extra-contractual referrals because they are told there is no treatment for the problems they are suffering from, and as the referral is for tests and research only they are not allowed to have them?
Baroness Cumberlege: My Lords, I appreciate that this is a very special need, which has recently emerged. As with many other new clinical conditions which may develop, it takes time to develop services.
Baroness Jay of Paddington: My Lords, I apologise for coming back and pressing the Minister on the point, but is it the case that the number of referrals is going up or going down at present? As I said, is it not therefore
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the case that, whatever the Government's intention in respect of moving away from the system, we are at the moment in a Catch-22 situation?
Baroness Cumberlege: My Lords, I think I answered that point fairly clearly. I said that we are trying to move away from extra-contractual referrals. Indeed, we have required regions to monitor the situation and ensure that there is a different way of purchasing these services.
Lord McIntosh of Haringey: My Lords, the Minister was asked a very simple question: is the number of extra-contractual referrals going up or down?
Baroness Cumberlege: My Lords, they will reduce in time.
Lord Monkswell: My Lords, is the Minister aware that public perception of referral for specialist treatment is that it is based on clinical need, which may be constrained by waiting lists? In her earlier Answer the noble Baroness referred to the "usual constraints". Apart from the points that I made about clinical need and waiting lists, are there any other usual constraints which the public should be aware of?
Baroness Cumberlege: My Lords, we are talking about very specialised services dealing with extremely rare diseases and conditions. They require a high degree of expertise. Sometimes that will also be a constraint in that that expertise will not be available.
Baroness Darcy (de Knayth): My Lords, does the Minister agree that delayed referral, for instance in the case of spinal injuries, can lead to many complications which will not only retard rehabilitation but also lead to frequent return visits to hospital, which is not only bad for the person concerned but also economically bad for the National Health Service? Can the Minister say whether there is anything she can do to encourage early referral to specialist units?
Baroness Cumberlege: My Lords, those are clinical matters. It is up to the doctors concerned to decide when somebody should be referred to a specialist unit. However, it is the duty of the regional health authorities to ensure that the facilities are available to meet those particular needs.
Baroness Masham of Ilton: My Lords, will the Department of Health take on the monitoring once regions disappear in one or two years' time?
Baroness Cumberlege: Yes, my Lords.

Iraq: Northern No-Fly Zone
2.56 p.m.
Lord Archer of Weston-Super-Mare Lord Archer of Weston-Super-Mare asked Her Majesty's Government:
Whether they can confirm that the no-fly zone over northern Iraq will be extended by the allies beyond December for a further six months.
The Earl of Arran: My Lords, the Government of Turkey are expected to discuss in December the extension of the basing agreement for aircraft patrolling

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the northern no-fly zone in Iraq. We have made clear that we attach importance to the continuation of the northern no-fly zone for as long as Saddam Hussein poses a threat to that area.
Lord Archer of Weston-Super-Mare: My Lords, I thank the Minister for that reply. Does he accept that Saddam Hussein would have crossed the border into Kuwait a second time if it had not been for fear of reprisal from the allies? Does he agree that exactly the same situation exists in northern Iraq and that, if he has no fear of reprisals, then Iraq will cross that border—I refer to the 36th parallel—and will kill the Kurds? Will my noble friend therefore ensure that he fights as hard as he can to ensure that the no-fly zone continues for another six months?
The Earl of Arran: My Lords, of course my noble friend is quite right. We can never rule out further threats from Saddam Hussein. We continue to watch the situation extremely carefully. We must maintain no-fly zones while the threat of repression remains. Operation Provide Comfort, which I am sure my noble friend knows well and which is based in southern Turkey, is crucial to the security and stability of northern Iraq. We strongly hope that the Turkish Government will agree to the extension of the operation when it expires at the end of December.
Lord Molloy: My Lords, is the noble Earl aware that the Kuwaiti people now believe that they live in reasonable safety with the protection of, primarily, the British and the Americans? Can he say that that protection will be forthcoming and that in no way will we take any risk that will allow Saddam Hussein to attempt to obliterate Kuwait as he did before?
The Earl of Arran: My Lords, I can give that assurance too. I am also glad to be able to inform the noble Lord, Lord Molloy, that the Speaker of the Kuwaiti Parliament is in London at this very moment. That is another symbol of the closeness of our bilateral relationship.
Baroness Blackstone: My Lords, can the Minister comment on reports that the UN Special Commission on the Disarmament of Iraq is so short of funds that it has begun contingency planning to close its operations? Does he agree that that is entirely unacceptable? Can he tell the House what action the UK Government are taking to rectify that situation?
The Earl of Arran: My Lords, I am not aware of that particular situation. I have not heard that rumour. On investigation, whatever information I come across, I can assure the noble Baroness that she will receive a prompt reply from me.
Lord Archer of Weston-Super-Mare: My Lords, will the Minister be kind enough to express to the
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Turkish Ambassador the appreciation of the Kurdish people in northern Iraq, especially remembering the unpleasantness they have received from the PKK?
The Earl of Arran: My Lords, I know that the Turks are well aware of our appreciation of their co-operation over Operation Provide Comfort.
Lord Kilbracken: My Lords, were the Turks to refuse permission for the flights to continue, is there any reason why they should not continue from some other base or country in the Eastern Mediterranean?
The Earl of Arran: My Lords, it would be idle speculation to make any comment on that. We have strongly intimated the necessity to the Turkish Government that the agreement should remain for a further six months. We very much hope that that will be the case.

Welsh Local Government: Issue of Guidance
3 p.m.
Lord Hooson Lord Hooson asked Her Majesty's Government:
When they intend to fulfil the undertakings given by and on behalf of the Secretary of State for Wales during the passage through Parliament of the Local Government (Wales) Act 1994 to issue "guidance" under Section 27(ii) with respect to the proportion and content of decentralisation schemes.
The Lord Advocate (Lord Rodger of Earlsferry): My Lords, the Welsh Office has established a working group of officials, including officers of both county and district councils, to consider issues relating to the preparation of decentralisation schemes and to help prepare guidance for the new unitary authorities. My right honourable friend the Secretary of State for Wales hopes to issue the draft guidance for consultation in February and substantive guidance before the new authorities are in place.
Lord Hooson: My Lords, does the noble and learned Lord appreciate—I am sure that personally he does—that time is important? The draft guidance was issued last January. During the debates promises were made that general guidance would be issued. The transition committees are now meeting but have no general guidance from the Government. Is there any reason for the delay, save that a party—it may be some parties —to the committee to which he has referred is dragging its feet?
Lord Rodger of Earlsferry: My Lords, we all recognise the importance of the guidance being issued. As the noble Lord said, during the passage of the Bill draft guidance was made available and Members of this House were able to consider it. That guidance has also been available to those considering their options over the period.
Nonetheless, a committee was set up. It was difficult to get that under way because, it has to be said, after Royal Assent the county councils operated their boycott until August. It was only after that period that the

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committee was able to set to work. It has met twice. It will meet again in the first half of December; it will have a further meeting in January. At that stage it is hoped to issue a further, more final draft. We shall certainly have the final version available before the new authorities are in place next April.
Lord Prys-Davies: My Lords, first, I thank the noble and learned Lord for the information that he has given the House. Did I hear him say that the working group has met only twice since the Bill received Royal Assent in July? Secondly, is there an awareness at the Welsh Office that the effect of that very tight timetable to which he referred is severely to weaken the capacity of the unitary authorities to construct workable schemes of decentralisation? Such schemes would have to be put together in a rushed fashion, possibly without adequate thought and without adequate consultation.
Lord Rodger of Earlsferry: My Lords, it is correct to say that the body has met on only two occasions. That is not to say that work has not continued between the meetings of the body, nor that it will not continue between the other meetings envisaged. As I explained, the structures in the Act are already available for consideration. Since earlier this year draft guidance has also been available. Many who are involved and interested in those matters are represented on the working party and are therefore aware of the issues under discussion. It is also true to say that the matters will have to be finalised within a relatively short timescale. However, applications for the decentralisation schemes can be made until the end of the year.
Lord Cledwyn of Penrhos: My Lords, the noble and learned Lord properly stated that draft guidance was available during the passage of the Bill through the House. Will there be a significant difference between the final guidance and the draft guidance? Why does not the Secretary of State for Wales take a more urgent interest in the matter? Is it because he seeks guidance from other sources?
Lord Rodger of Earlsferry: My Lords, I do not know to what extent the guidance will be radically different at the end of the day. However, it will take account of the many practical issues being raised by representatives of the county councils and the district councils who are therefore able to put more practical flesh on the bones than was perhaps available at an earlier stage. It is precisely in order to gain the input from those councils that such a committee was set up. Therefore we would expect the guidance to be more useful at the end of the day.
Lord Harmar-Nicholls: My Lords, is my noble and learned friend aware, as will be anyone who attends this House regularly, that the Welsh point of view will always be put forward so long as we have present the noble Lords, Lord Cledwyn of Penrhos and Lord Prys-Davies, who have the parliamentary means of so doing?
Lord Rodger of Earlsferry: My Lords, although I particularly appreciate the contribution often made by the noble Lord, Lord Cledwyn, many other noble
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Lords—the noble Lord, Lord Callaghan, is present—when appropriate, put forward the Welsh point of view; and we welcome it.
Baroness Hamwee: My Lords, does the noble and learned Lord accept that, knowing the penalties that the Government can impose when, having set an impossible timetable, the local authorities do not act in quite the way that they wish, the English local authorities sympathise with the Welsh local authorities?
Lord Rodger of Earlsferry: My Lords, I am not informed whether the English local authorities sympathise with the Welsh local authorities. All I can say is that the work is being taken forward in an appropriate way.
Lord Hooson: My Lords, while we are grateful to the noble and learned Lord for his efforts as a temporary, naturalised Welshman on behalf of the Secretary of State, will he please convey to his right honourable friend the great concern in Wales that after the months have gone by no guidance has been issued? An undertaking was given that what was said in debates would be considered; and here we are with no guidance. A transition committee is sitting on which there are representatives of the county councils and district councils. It has no guidance from the Government. The matter should surely be remedied sooner than next February.
Lord Rodger of Earlsferry: My Lords, of course one welcomes the work being done by the transition committee. However, as the noble Lord knows, the decisions on whether to have any such decentralisation scheme, and, if so, which model, will be for the new authorities. I stress that the guidance will be available before those authorities take up their office.
Baroness White: My Lords, is the noble and learned Lord aware that many important schemes and proposals are being held up because the Welsh local authorities have no idea what the position will be 12 months from now?
Lord Rodger of Earlsferry: My Lords, on that specific matter, the authorities will have plenty of guidance before they have to take the necessary decisions.

Business
Lord Strathclyde: My Lords, after the debate on health and social services and before the debate on occupational and other pension schemes, my noble friend Lord Mackay of Ardbrecknish will, with the leave of the House, repeat a Statement that is to be made in another place on social security.

Long-Term Care: Financing
3.9 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke rose to call attention to the uncertainties within the health and social services concerning the financing of long-term care; and to move for Papers.
The noble Lord said: My Lords, I very much regret that I shall be unable to stay for the whole of the debate because I am in some discomfort which requires attention. Of course, no discourtesy is intended and I apologise to noble Lords. I shall return if I am able, but in any case I shall read avidly the speeches in Hansard on this important subject.
The central theme of the debate is the failure of the Government to deal with the health and community care problems of some of Britain's most vulnerable people: those who need long-term health care. At a time when such people need reassurance and dignity, they are faced with anxiety and distress. Today we are concerned with people whom doctors simply cannot help yet whose health is such that they need continuing care which is often nursing care.
Our aim in the debate is to seek constructive solutions. I have no doubt that the aim of the noble Baroness, Lady Cumberlege, is the same, because she always tries to be helpful. Nevertheless, it is urgently necessary to explain the ways in which the Government have created uncertainty, confusion and even despair.
The basic principle of health care is that it is funded largely by taxation and is free at the point of delivery, whereas personal care services are provided by local authorities, are means-tested and are charged at the point of delivery. The significance of that distinction is absolutely crucial, especially in view of the reduced number of NHS continuing care beds and the movement of funds from social security to community care.
The facts are staggering. In the past three years the number of NHS beds for continuing care has dropped dramatically from 73,000 to 59,000. The reassuring open-ended social security funding for people in homes has been replaced by rigid, cash-limited community care budgets. So it is no surprise that, trapped in this web of inadequacy, both district health authorities and local authority social service departments have become involved in squabbles—undignified squabbles, but squabbles nevertheless—about who is responsible. That is damaging to everyone concerned. I believe those squabbles damage the relationships between the district health authorities and the social service departments. But they damage the interests of the patients even more. There are frequent reports of patients actually being forced out of National Health Service beds. The sad case of the brain-damaged man who was ejected from a Leeds hospital led to an inquiry by the ombudsman. The question is how far that very sad and distressing case was an isolated one or how typical it was of others.
The recent draft guidance from the National Health Executive, presumably supported by the Minister and her colleagues, failed either to clarify issues or to ease the growing tension. Instead, what it actually did—although it sought to disguise it—was to introduce significant changes of emphasis and of policy. It has been widely criticised. The criticism has provoked Ministers in this House and elsewhere into claiming, with an air of injured innocence, "No, nothing has changed".
Well, let us have a look at the assertion. The House is entitled to examine rather dogmatic insistences that nothing has changed. For a start, the guidance- is ambivalent. I trust that the Minister has it on her knee. She will notice that on page 1 is trumpeted the reassuring message:
"The National Health Service remains responsible for meeting … the needs of people who require long term physical or mental health care".
That is fine; there is no ambiguity. It is a clear statement of fact. However, if the Minister turns to page 2, she will see that,
"the expectation will be that the significant majority of people who require continuing care in a nursing home setting are likely to have their needs met through social services".
Not the National Health Service, but social services! We have already seen the distinction between the two: one where you pay and one where you do not, with a great variety between them. So it seems that, according to the official document backed by the Government, you choose your page and then you make your choice.
The guidance has even more tricks tucked away in the text. After reassuring us that the NHS remains responsible, it slips in the phrase "within available resources". That is a significant point for the Government to make about the National Health Service which we have always assumed to be free at the point of delivery.
The Association of Directors of Social Services has observed that the comment is in marked contrast to the guidance issued to local authorities before the implementation of community care. That indicated that once eligibility for a service had been established budgetary constraints could not be a consideration in the provision of a service. That is a very important statement. In other words, the local authority service was a right, but continuing care on the National Health Service is now conditional on money which may or may not be available. It is a very different health service that we see unfolding, judged by the guidance of various authorities.
If the Government really want to clarify their policies, they should define their concepts. As the Minister will see in the guidelines, one of the most important sentences is:
"For some people, and certainly those with complex or multiple health care needs who will require, on a long or short term basis, continuing and specialist medical or nursing supervision, the NHS should be responsible".
Yes, of course it should. Apart from the clumsy phraseology, may I ask what is meant by the phrase,
"complex or multiple health care needs",
or the phrase,
"specialist medical or nursing provision"?
I know that the Minister will try to be helpful. I invite her to give a clear and specific explanation when she replies to the debate.
The caring organisations are very concerned that no precise meaning has been attached to the words. Many are very anxious indeed; in fact, all those to whom I have spoken are anxious because on those words,

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definitions and precise meanings hangs the positioning of the future care of thousands of individuals together with major financial implications.
So it is no small issue. It affects the whole of the financing of vital services for thousands of people. That is why I press the Government for clear, categorical and specific answers. Without national definitions, national criteria, we shall have increasing conflict and growing variation as local bodies make definitions to suit themselves. The present mish-mash of decision-making is causing undignified bickering, angry conflict and deep misunderstanding. It is eroding, even destroying, the equitable provision which is the real strength of our proud National Health Service. If that equitable provision goes, it is no longer the National Health Service all of us have cherished.
There is an overwhelming need for national criteria for National Health Service provision of continuing care. The Government should take steps to provide such criteria. If they do not—and millions of people will listen to the reply to this debate—the reasoned and reasonable presumption, the moderate presumption, is that the Government are working towards relinquishing National Health Service responsibility for continuing care. That, to put it very mildly, would be deplorable.
The issue of hospital discharges is a sensitive and distressing one. Here again, the Government are ambivalent. Most people, I assume, in this House, and certainly millions of people outside, have long assumed that no National Health Service patient should be placed in a private nursing home against his or her wishes if he, she or a relative is unwilling to be responsible for the home charges. After all, that is what the current guidance on hospital discharges says. It is in black and white. It is official; it comes from the Government. That is why millions of people believe it. That is fair enough.
But the new guidance, which the Minister has on her knee, disingenuously omits that stipulation. It speaks merely about "taking account" of the person's and the family's wishes. I could take account of the philosophy of Genghis Khan, but it does not mean that I take it very seriously. The Government can take account of these issues; it does not mean that they have to take them seriously. The previous guidance made the commitment mandatory; the present guidance wriggles out of that. It avoids and evades it. This is a matter to which Members of this House and of another place should give very careful scrutiny and in relation to which they should insist on clear government answers.
The guidance goes on to say that although,
"Every effort should be made … to meet the … wishes of the patient",
if a person has been assessed as not requiring NHS long-term care the question of how long the person can stay in an NHS bed depends on,
"the needs of other patients".
It does not depend on that patient; it depends on the needs of other patients. I suggest—it is only a suggestion—that bed needs are winning when they conflict with the patient's wishes to retain a National Health Service bed.
The Association of Directors of Social Services, a very responsible body, says that there is increasing evidence—not hearsay—that in a substantial number of local authorities there has been a significant increase in elderly people who die shortly after having to leave hospital to go into a nursing home.
What a situation to have to consider! The Minister can always contradict me if I am wrong. This is only my interpretation, not that of the association. But apparently the harsh message is: if you are dying but the shortage of beds means that your bed is needed, you must leave hospital to die; if you are a man, while you are dying your wife may have to use all the proceeds of your occupational pension scheme to pay the fees for a private nursing home; and if you linger too long before you die, nearly all of your joint savings may have to go too.
I believe that to be the correct interpretation of the present situation. To put it mildly, it is shocking and disgraceful. Without national definitions and criteria, we shall have increasing conflict and growing variations as local bodies make definitions to suit themselves. We have to be very, very careful indeed about this matter.
I shall draw my remarks to a conclusion as I am afraid I have spoken for far too long. I emphasise that in no way do I criticise the hospitals or their dedicated staffs of doctors and nurses for any of these enormously complex and difficult problems. The staff are in no way to blame. They do a marvellous and dedicated job. They are struggling to meet new obligations and to provide for people from money that has not been made available to the required extent. The fault—I wish to emphasise this—lies not with the hospitals or the doctors. It lies with the Government.
Ministers have a clear responsibility to ensure that vulnerable people who are in difficulty and distress suffer no additional burden. The Government should reconsider their policies. They should make sure that those policies are clear and constructive and that they rest on the criteria I have mentioned. They should act speedily, sensitively and generously.
My Lords, I beg to move for Papers.
3.27 p.m.
Baroness Seccombe: My Lords, first, I ask the indulgence of the House. I am afraid that I am unable to observe the convention of the House in remaining in the Chamber for the entire debate. I have a long-standing commitment so I shall have to leave early. I have apologised to the closing speakers, and especially to my noble friend the Minister.
The debate on continuing care is part of a wider debate on community care in general, which affects many stages of our lives. This afternoon, however, I shall concentrate on care for the elderly. I start by addressing two common misconceptions.
First, community care is not a new concept. For many years and in many circumstances care has been provided for people in their own homes, or in homely surroundings in the community. But it has increasingly been recognised that long-term institutional provision, particularly in geriatric wards in hospital, may often be

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degrading and dehumanising. Providing appropriate care for elderly people in the community, properly financed and properly organised, is, I am sure, an ideal towards which all of us would wish to aim. We live in a compassionate country where we value choice for our elderly relatives. Living in their own home or in homely surroundings is, for many, vitally important.
Secondly, when care is provided in the community that does not exclude the possibility of it being provided by the health service free of charge where there is a need for health care. The 42,000 NHS community nurses working across the country would, I am sure, confirm this; as would the 1½ million elderly people who are treated by those community nurses every year and the many who receive health care in a residential setting.
As noble Lords will be aware, earlier this year the Government published draft guidance on continuing care. This made it clear that the NHS has, within available resources, an ongoing responsibility to meet long-term health care needs—including the needs of people who require continuing care from the NHS in a residential setting or in the community rather than in a hospital.
Clearly, people's individual needs for care differ, but their general requirements remain the same. In each case, they require a full assessment of their needs. They need a clear decision on whether they require continuing NHS care —a decision based on a clinical judgment—or whether they require social care. Also, they require information and advice on discharge procedures and on options for long term care. These requirements were set out in the recent guidance. It stressed the need for health authorities and local authorities to work closely together. Contrary to general belief, it did not change the responsibilities of the NHS to provide continuing care, but sought to reinforce and clarify existing responsibilities. Indeed, I understand that working relationships between health authorities and local authorities have already improved recently, as a result of the agreements which have been negotiated between them as part of the community care reforms.
Nevertheless, the distinction between health care, which is provided free of charge by the NHS, and social care, provided according to means, has been in existence since the foundation of the welfare state. The House may be aware—certainly noble Lords opposite must be aware—that it was a distinction recently endorsed in principle by Labour's Social Justice Commission.
But there is also a third sector which provides care for elderly people: the voluntary sector. Many of us throughout our lives are conscious of the great kindness and support given to those who live near and are in need of a helping hand one way or another. I should like to pay tribute to those who give so generously of their time and love.
I have been deeply impressed by the very valuable work done by young people, who are often still at school; and more and more retired people care for a parent in their 80s or 90s. But many elderly people reach a stage where more formalised care is necessary and
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this is where residential care plays its part. Clearly, it is essential that their needs are assessed without the ethos of care becoming lost in bureaucracy.
Local authority social service departments have willingly grasped the nettle of organising such assessments and arranging for services to be provided. In most cases good progress has been made. But, as in the case of any new initiative, some local authorities may have faced a few teething problems.
I have recent experience of looking after an elderly relative. I found the rigidity of the system a little difficult; for example, those requiring help with getting ready for bed may be forced to accept it at any time between 6.30 p.m. and 10.30 p.m. In such circumstances nothing can be arranged for the evening, which consequently can be lonely and miserable. Clearly, greater flexibility may be required.
There has been much publicity over funding for community care. Some local authorities claim that they have exhausted their funds at this stage of the financial year. I read that with some amazement. The amount available for social services spending in this financial year, including community care, is £6.4 billion, which is nearly double the amount available four years ago and an increase of 48 per cent. in real terms. No other area of local government spending has increased nearly so rapidly. It is up to local authorities themselves to discharge effectively their new responsibilities—responsibilities for which they have long campaigned.
However, I am confident that in working with the health service and the independent sector they will be able to move us towards the "seamless service" of health and social care, provided according to individual need, which we all seek.
3.35 p.m.
Baroness Hamwee: My Lords, I thank the noble Lord, Lord Ashley of Stoke, for introducing this very timely debate. I am glad to have the opportunity to look at what care in the community should mean and how it can be paid for. I believe that it should mean encouraging independent living, where that is practical, and particularly facilitating an informed choice for users. I include carers among the users. It should mean enhancing the development of communities, so that the designation "care in the community" can be given real substance. It is a concept that we on these Benches support.
It is ironic that so much effort was put into debating whether or not community care budgets should be ring-fenced. Would that the cash were there and that it were now a material issue. The noble Baroness, Lady Seccombe, spoke of social services departments "claiming" to have exhausted budgets. The claim is a very real one.
I too see the matter somewhat from the viewpoint of social services. Like the noble Baroness, I believe that the provision should be a seamless provision—both health and social services—and that the right perspective is the perspective of the user. We know of ministerial statements that there are no changes in policy but we must all also have encountered the wide perception that in fact health care boundaries are

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shifting, leading to greatly increased demands on local authorities. The reduction in waiting lists, day surgery, the management of performance related to throughput and contracts concerning the volume of patients must all have their effect.
If there is to be less structural cohesion between health and social services—by that I mean the use of the local authority structure to bring health services into local democratic control and locally accountable—then various issues must be addressed: issues about defining the boundaries of responsibility; issues of quality, such as where very ill people want to be; and there must be the maximum of openness and clarity with patients and carers on the services that they can expect and the financial contributions that will be required of them. It seems to me that one of the tragedies of the current situation is that the relationship between the NHS and social services departments must tend to be less collaborative without enormous efforts to be more so.
The debate is about financing. That includes financing by individuals. There is an increasing tendency of the NHS to define its boundaries as relating to those who are acutely ill. As the noble Lord explained, costs going to local authorities means the covert—I do not use that word with any sense of malice but it defines one of the hidden effects —withdrawal of free health services and in their place a charged means-tested service. I accept that care at home or care in a nursing home—many nursing homes are homes—is often more acceptable than care in hospital; but that care should be accessible.
It seems to me from a local authority perspective that increasingly services provided by local authorities are not necessarily provided most cost-effectively or appropriately. Let me mention domiciliary care. Too often those who provide domiciliary care—those at the sharp end—were originally home helps. They have had a little training but the strain on them in undertaking what is increasingly a nursing function must be enormous. Of itself, that will lead to a vicious spiral in recruitment. On the other hand, nurses are trained not just to give direct health care but to diffuse emotion and counsel when there is a bereavement. We need to review the use of our resources overall.
Over the past few days I have asked colleagues what might come positively from the current crisis. Sadly, I have not found any real, positive, constructive ideas—and this is a crisis. Indeed, the only sentiment that I can identify is that, among the public, who think that local authorities should put all their efforts into picking up litter and dealing with other important but perhaps more minor matters, there may be a greater understanding of the emphasis that local authorities will have to put on social services care.
I conclude with a thought that was put to me at a meeting last week by a representative of a carers' organisation. Among those for whom we need to care—not all, but a part of the client group—are elderly people. They come from a generation who thought that their national insurance contributions would fund their care; who fought the last world war or are the widows of people who fought the last world war. This year we
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commemorated the Normandy landings; next year we shall commemorate VE Day. The Royal British Legion act of remembrance ends,
"We will not break faith with you".
Let us not do so.
3.40 p.m.
The Countess of Mar: My Lords, if ever there was an occasion when noble Lords could justifiably turn to the Government and say, "We told you so", this is it. They will recall their struggle to persuade the Government that funds allocated to local authorities for community care should be ring-fenced. Sadly, that battle was lost and we are now finding that many local authorities, especially those shire counties in the south-west of England, are having to make very painful decisions on behalf of their vulnerable and elderly clients.
I believe that local authorities approached the introduction of care in the community constructively and responsibly. The fact that central government allocation of funds is strictly cash limited has ensured that the rapidly escalating expenditure under the social security system has been successfully capped. Of course, that is exactly what the Government meant to achieve.
If the provision of community care really is to meet the needs of those for whom it is intended, it must be properly funded. I live in Worcestershire. On 17th November this year the chairman of Hereford and Worcester County Council social services committee announced that the council could be facing a £2.4 million deficit unless stringent measures are taken. She said:
"In this county it is putting staff in an impossible position and some very difficult decisions may have to be made as to who will receive care and who may be left wanting".
The chair of Shropshire County Council policy and resources committee, on 15th November 1994 predicted a shortfall in their community care budget of between £1 million and £1.5 million this year. She said:
"Our figures arise from significantly increased use, particularly of nursing home places, as well as packages of care. The extent of spending was not anticipated in early community care plans which were drawn up for the first time 18 months ago".
Similarly, Gloucestershire County Council is facing a £2.5 million shortfall. A Conservative and Independent member of the council's social services committee is quoted as saying,
"Community care is one of the most important innovations to come from the Conservative Administration. It was working well in this county but it is asking the impossible when £2.5 million of grant is suddenly removed from us and similar or larger sums from the other shire counties. It puts our staff in an impossible position".
Why is it that social services departments in those local authorities are suddenly finding themselves in an untenable position? There are two main reasons. First, after a slow start, demand for home care and residential and nursing home care has greatly exceeded early estimates. In Hereford and Worcester community care workers are having to deal with 1,000 extra referrals a month; requests for home care are up by 20 per cent. on last year's figures, and the number of children in local

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authority homes has also escalated. In Gloucestershire there has been an increase of 40 per cent. in clients being assessed. Perhaps the Government's publicity machine worked too well!
The other reason for the shortfalls is the sudden and arbitrary decision of the Government in December 1993 to redistribute their allocation of the special transitional grants between local authorities. The shire counties lost nearly £80 million, while the metropolitan districts and inner and outer London authorities gained that amount. Will the Minister please explain why so much money was taken away from the shire counties so suddenly? They had drawn up their budgets on the basis of funds promised by central Government only to find that, without any prior discussion, those promises have been broken.
What is the result of that combination? The director of Gloucestershire Social Services wisely says,
"this is not a budget crisis, as managers within the Department have a responsibility to maintain expenditure within their budgets. They can only do this however, by applying much tighter criteria for the delivery of services. This will have severe implications for users and carers in the county".
The reports I received from Hereford and Worcester and from Shropshire are similar. They are not profligate local authorities. Their staff are prepared to cut their coats according to the cloth, but they must make painful decisions. In some cases services will have to be refused and in others they will be withdrawn if clients do not fall within the priority categories. Services will inevitably be reduced and rationed to people who are at risk and there will be extended waiting times for services.
Time does not allow me to expand upon the impact that those strictures will have upon clients and their carers. I simply say that we should not be surprised to hear a catalogue of horror stories similar to those which prompted Her Majesty's Government to develop a community care strategy in the first place. I am extremely grateful to the noble Lord, Lord Ashley of Stoke, for enabling us to debate this subject this afternoon.
3.45 p.m.
Baroness Macleod of Borve: My Lords, the noble Lord, Lord Ashley, introduced the debate with his usual eloquence, which we have come to expect. Unfortunately he is suffering from a badly trapped nerve which must cause him a lot of pain. However, I congratulate him in his absence on the way in which he introduced the debate.
I want to concentrate on widows and the elderly—and I must declare an interest in both. When I was young our sell-by date was three score years and ten. Following advances in medicine, science and the experience of doctors, it has now become three score years and twenty. In declaring my interest your Lordships may like to know that I am very near three score years and twenty and feel therefore that I can speak for a few minutes this afternoon.
During the time of the present Government—the past 15 years—enormous help has been provided for the elderly. All sorts of things have been introduced to
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enable them to live better, to work if they are not too old, to be happy, to be surrounded by as much comfort as we are able to give them and, with any luck, to allow them not to have to worry too much about the future financially. We have come a long way, perhaps further than with any other part of our society.
If we look around we can see what various boroughs are doing to help the elderly. This morning I rang my own borough of Enfield, which is where my late husband and I lived and worked for many years. It is doing an enormous amount to help people stay in their own homes, with in many cases the help of carers and government finance. I can say to the Minister that we should be proud of what we are doing for our old people.
It is estimated that over 800,000 UK citizens are over 85 years of age, of which 60 per cent. are infirm. If one is infirm one needs specialist care. It is not enough for someone to come in occasionally and make a cup of coffee. Carers cannot look after infirm patients and it is a large number of people to cater for in their own homes. However, there are now many more purpose-built homes which cater for local authority people, private residents and those who have a limited amount of money—under £3,000—to go towards their keep. That is a help, but it is a drop in the ocean of the enormous costs involved.
We are a very ageing population. However, not all the widows whom I meet are elderly. One can be a widow from the age of 19 to 99. Many widows need help and consideration from carers in the community. I should like to pay tribute to the carers and to the inspiration behind the carers. They are very specialised people, or perhaps I should say very special people. They go into other people's homes to help them. They are not necessarily there all day. Sometimes each carer will have three different patients per day and she goes round from house to house. I pay tribute to the inspiration behind the carers.
As always with the elderly, lack of money is the dread. Very few of us, even in your Lordships' Chamber, are not worried about getting old and all the costs involved, which leads me to one very difficult subject. I refer to funerals. I do not know whether noble Lords are aware of how much a funeral will cost anyone who is left behind, but it is way over £1,000. Fairly recently—about eight years ago—the Government provided a grant of £1,000, which is of enormous help. That can be paid by the social services at once. But if the funeral itself costs way over £1,000, then money is very tight in many families.
I have a very great interest in the children as well. However, so many noble Lords will be talking about the children that I thought I would leave that subject to those who have perhaps more up-to-date knowledge than my three score years and twenty allow.
3.52 p.m.
Lord Brimelow: My Lords, the noble Lord, Lord Ashley, has thrust a very powerful light into the shadowy uncertainties surrounding the financing of long-term care. The previous speakers in the debate—so far I have agreed with everything that has been said—

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have adopted a rather broadbrush approach and have tended to describe what is instead of concentrating on the uncertainties. I wish to focus a very modest hand-torch on a limited subject; what is actually going on at the moment in the health area of Islington and Camden, where I live.
I am very worried about the future of district nurses in Camden but I am also very uncertain about how discussions at present in progress will turn out. Perhaps I should explain the background. Not all long-term care ends with death in an institution or in hospital. As the noble Baroness, Lady Macleod of Borve, has stressed, there is a great deal of care at home which has been very well rendered hitherto. The uncertainty is in regard to the future.
In the health area of Camden and Islington the provision of community services, including district nursing, is in the hands of the Camden and Islington Community Services NHS Trust. The trust is under pressure to effect economies. The current two-year contract between the trust and the Camden and Islington health purchasing authority calls for a reduction in costs over the next two years of 7 per cent. As part of its search for economies, the trust is proposing to reorganise district nursing. It proposes to establish within the Camden and Islington area 29 nursing teams, each headed by a nursing sister—technically a G-grade nurse. Acceptance of this proposal would mean the disestablishment of 32 G-grade district nurses—more than half of the present complement. My understanding is that the posts of head of team and deputy head of team will be open to competition.
The trust says that there will be no compulsory redundancies, but among the district nurses there is anxiety that those who fail to secure appointment as head of team may be offered posts of lower grading, with presumably a reduction of pay. They are worried and uncertain about their future. They also fear that, if they turn down a post offered, they may be held to have made themselves redundant. The district nurses are now working to see whether they can find an alternative system whereby the economies imposed on the trust can be achieved. They are uncertain whether they will succeed in finding such an alternative system. The prevailing uncertainty is worrying quite a number of general practitioners.
I have read the job description of the G-grade sister who will be the head of a team. In my opinion, it is not a job description suitable for a district nurse engaged in nursing. It is a job description of an administrator. In it the word "nursing" is not even mentioned. It is all about co-ordination. I fear that we may be moving towards a bureaucratic system in which actual nursing is done by smaller numbers of lower qualified nurses; in other words, a service which is likely to be inferior to what we at present have. My fear may prove to be unfounded, but I am uncertain about the future.
The present system is flexible and not bureaucratic. For terminal care, and terminal care in the community for people who have been cared for over a long period in hospitals or other institutions but who for one reason or another wish to leave or have to leave, the sisters attached to the health centre nearest to where I live are
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quite splendid. They are well qualified, but, much more important, they have the tactful understanding which comes from long years of dealing with people who are about to die. I speak from personal knowledge.
I fear that we may be about to lose something excellent for something less good, but I am not certain. With the devolution of authority to trusts and to local health authorities, I am not certain who is really in control of developments as a whole. The Departments of Health and of Social Security may not even know in detail what is happening. They may be glad not to know. The Government have told us that the NHS is safe in their hands, but how much of the local administration within the departments—
The Countess of Mar: My Lords, order. The noble Lord has now had eight minutes.
Lord Brimelow: My Lords, I beg your Lordships' pardon.
4 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Ashley of Stoke, for initiating this debate which I hope will bring to the Government's attention some of our concerns over the grey areas of health and social services. There are two great differences between health and social services. Health provision is free at the point of delivery while the provision of social services is being means-tested.
To illustrate what a dangerous situation long-term disabled people can find themselves in I shall tell your Lordships of a case history which ended in tragedy this summer. In North Yorkshire a paraplegic woman, who was one of the most uncomplaining and splendid of people who gave much of her time to helping others, became ill. She had two separate attacks of pneumonia and diarrhoea. She lived at home with her brother who had an alcohol problem and a terminal condition. He was not adequate to help her in any way. She was the organiser at home. Two of her friends and neighbours felt that she should be in hospital. A trainee doctor visited, but did not send her to hospital. Her friends, neither of whom could give her a bath because of back problems, kept requesting help. A district nurse called, saying that she could have help with a bath only once every two weeks. With diarrhoea and being weak as a paraplegic, is that adequate?
The case was passed to the social services. This is the grey area: what is "health" in such a case and what is "social services"? Her friends became more and more concerned, bringing her food and trying their best. Her doctor came back from three weeks' holiday and admitted her to hospital. She was by this time very ill and dehydrated. In the early hours, she fell out of bed. The next day she died of an undiagnosed perforated ulcer. Care in the community had let her down. The community had lost a good member. Her friends, who were her carers, were devastated.
As president of the Spinal Injuries Association, I can assure your Lordships that when severely disabled people become ill they are very much more at risk. They do not need less help. They need constant monitoring and attention. When feeling is non-existent or partial,

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very careful diagnosis is needed. When the Minister replies, I hope that she can give some assurances and say that there should be safeguards, not vacant spaces, in the care system.
People who have lived carefully, who have worked and saved, always seem to be the ones who get little, help when they need it. Buying in care, be it privately or paying the social services, can leave them without enough to live on. Is there not some way in which they could buy their care and have some tax relief?
Much is going on in the strategic development of primary health care, but much has to be done to improve the system. Family health services authorities and health authorities are working closely together. Many have joint executive officers in preparation for merging. The continual change within NHS structures costs a great deal in terms of time, work and uncertainty, but there is still a great deal of good will. Local communities and voluntary bodies are keen to be involved. Everybody wants to see improvements in the equity and effectiveness of the services.
One area of concern is the shortage of doctors now going into general practice. I should like to ask the Minister what is the reason for that. With so much more health care taking place in the community, doctors need to be trained and resourced for the job to a high standard.
Everyone, I am sure, wants to see patients receive the care that they need safely and in the place that best suits their needs and wishes. Patients and GPs need quick and helpful access, when needed, to a consultant, and health workers and patients need to have confidence that hospitals will be there when needed. It must not be forgotten that in rural areas there are extra expenses in terms of time and travel when providing care in the community.
Alcohol and drug detoxification centres and treatments are examples of the need for health and social services to work jointly. Incontinence is another aspect which can fall between two stools, with the Department of Health providing some care and social services the rest. There need to be national explicit criteria clarifying National Health Service responsibilities. When social services carry out an assessment, there needs to be the provision of care if necessary.
The big "in" word at the moment is "assessment". I end by asking the Minister: Is there a time limit on how long people have to wait? Are there enough occupational therapists to do the job?
4.6 p.m.
Lord Jenkin of Roding: My Lords, I welcome the opportunity that has been provided by the noble Lord, Lord Ashley of Stoke, to say a few words on this subject. It is in the nature of a debate on such a subject that one hears more about the failures and shortcomings of the system than about its successes. No noble Lord has questioned the rightness of the policy of community care. Indeed, as my noble friend Lady Seccombe said, there is nothing new about community care.
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In the field of mental health, it was Enoch Powell who nearly 40 years ago sounded the death knell of the old, remote mental hospitals. The process is steadily proceeding whereby the great majority of such patients can be cared for in the community. I remember that it fell to me to open many of the new community facilities that were provided under the Worcester Project, as it was called, when the Powick Hospital closed and a whole range of community facilities were provided. Since then, great strides have been made. The milestone was what is sometimes called "Griffiths II", which placed a very firm and continuing responsibility on local authorities for patients being cared for in the community.
I should have liked to follow many of the points that were made by the noble Lord, Lord Ashley, but time is inevitably limited, so I shall address just one aspect. I refer to a point that was picked up by my noble friend Lady Masham; that is, the importance of collaboration between all the various agencies involved. I see it from the point of view of an NHS trust, which is not only a hospital trust but an integrated trust having responsibility for community health services in the area. The Forest Health Care Trust covers an area surrounding Whipp's Cross Hospital in the north-east of London. We are heavily involved in various aspects of community care. I should like to give the House some examples of what is being done to make good community care a reality. It will not surprise noble Lords that much of that depends on partnership, on working with others and on ensuring that we are all working towards the same end.
The noble Lord, Lord Brimelow, mentioned the district nursing service. We attach enormous importance to expanding and developing the district nursing service to ensure that as much care as possible can be delivered to people in their own homes, in residential care or wherever they may be. Having abolished the hospital door, as it were, because we manage on the basis of client care groups, we find as an integrated trust that providing such care comes completely naturally as one moves services out into the community and works alongside the other agencies and voluntary bodies that are involved in the same area.
We are building up the local GPs—and here again I agree with my noble friend Lady Masham—by the establishment of primary health care teams, involving a wide range of disciplines including the community psychiatric nursing service, which is something of enormous value. We are increasing the outreach of physiotherapists and occupational therapists to make sure that services can be delivered in people's homes and that they do not need to go into hospital.
I should like to draw your Lordships' attention to three specific projects. We have a joint project, jointly funded by the trust and by Waltham Forest social services. It is managed by Age Concern and it enables quicker and more appropriate discharge of elderly patients from hospital care. The project aims to supply an after-care service to elderly people who are discharged from hospital but perceived by hospital staff as not requiring statutory services as part of the discharge plan. It also helps other patients prior to admission when they have been in receipt of social

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services care and who are also visited as part of the aftercare project to ensure that all is well on discharge and that the social services have started efficiently.
It is actually filling a gap in the service provision on discharge from hospital and testing the criteria for the need for social care, as perceived by ward-based professionals and with the help of their social service colleagues. It is in its early stages and we shall have an evaluation coming to my board in February. I hope that we are going to be able to show that this is a very specific model of collaborative care that is making a reality of community care.
To take another example, we have what is called the Larkshall Young Disabled Unit. It offers specialist health provision to highly dependent, younger and physically disabled patients. It has a highly skilled specialist nursing workforce and they offer a valuable contribution towards multi-agency assessment of need for highly dependent younger disabled people, following trauma or medical conditions such as severe strokes, who wish to remain in the community and do not want to be in an institution. A lot of the work involves confidence building among users and carers who are in touch with the service, empowering patients to live independent lives in the community.
There are obviously facilities for respite care and so on. Here again, this involves a great deal of collaboration between all the various agencies which are involved and which can make a reality of community care. We have a proposal coming before us for a primary intervention service —sometimes called a hospital at home—which is being developed jointly with the primary health district nursing service, with the services for the elderly with social services, with the general practitioners and with the residential home owners. This is to enable the health trust to be able to deliver health packages to those living in the community and who can be helped to maintain an alternative to hospital admission. In some cases, we would expect this help actually to avoid the need for hospital admissions for selected acutely ill episodes.
Here again, we are working very closely with Waltham Forest social services, interested local home-owners, and with one general practitioner practice to research the possible extension of the hospital at home scheme into the residential care home environment. Again, a pilot scheme will be set up; it will be monitored, evaluated and eventually reported. I suppose the point that I should like to make on this, and then I must sit down, is that this is possible in an integrated trust. I think we are going to be able to demonstrate that that is actually a very good model for the delivery of care.
4.14 p.m.
Baroness Nicol: My Lords, I am sorry that my noble friend Lord Ashley was unable to stay until the end of what is proving to be a most interesting debate. I want to concentrate my few minutes emphasising the value of, and the pressures on, carers—all carers, but in particular those who care for a relative, a friend, or in many cases a child, from love or a sense of duty, and who are in that position for 24 hours a day.
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It is estimated that some 6 million women and men in the United Kingdom act as full-time or part-time carers for those in need of support. Many of them struggle in difficult situations without help and even without recognition. About 1 million of our fellow citizens are caring full-time for a disabled elderly or mentally ill person. The National Federation of Women's Institutes estimates that one in three carers do not receive any support. Some may be helped by local services, but whether they receive support or not many have to carry the burden of responsibility of caring for someone who cannot manage alone for 24 hours a day, seven days a week, with all the ongoing strain involved.
All too often the carer has had to abandon any attempt to follow his or her career and is unable to maintain any separate personal life. Even when some outside work can be undertaken it is part-time and therefore mostly low paid. So financial problems are added to an already stressful situation. It is not unusual to find that when a carer is finally released from his or her responsibility, re-entry into the job market is difficult, and the loss of job and pension prospects can never be recovered. Yet carers save the taxpayer billions of pounds. It has been estimated that if they all had to be paid the going rate of £5.80 per hour the average annual cost would be of the order of £30 billion. It therefore makes good economic sense as well as good social sense to make sure that the support services are good enough to keep the carers going.
Perhaps the most desired and the most immediate relief is that mentioned by the noble Lord, Lord Jenkin of Roding: respite care. I think he has been alone in mentioning it. To be given a break from the daily pressure can be a life-saver. Some voluntary organisations and local support organisations do a splendid job in providing respite care for carers, but there is not nearly enough and, geographically, it is patchy. It is not unusual for a carer to find that there is no one within the kind of reach that makes it easy to come and go.
My party has produced a consultation paper called Making Carers Count. It gives valuable information on the background to the problems of carers and makes many useful suggestions for improvement. There is not time to read all of them, particularly as I have a question to put to the Minister. I wish, however, to mention one or two. We suggest that local charters for carers should set out clearly the services available in the area. It is surprising how little some carers know about what is available to them. We need a charter in which carers can find all the information they need. I understand that a scheme in Leeds has been very successful.
All carers should have an opportunity for separate assessment of their needs. That will obviously require visits from the professionals but it is important that carers should know exactly what they are up against and what is available to them.
Carers should have access to flexible and affordable respite care. That is always available if you can pay for it, but it is not an option which is open to many people, particularly if the problem has gone on for any length of time. As the noble Lord, Lord Jenkin, who has now abandoned us, said, it should be done by way of

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partnerships involving local authorities, the private sector and voluntary organisations. This is something the Labour Party supports.
The noble Baronesses, Lady Seccombe and Lady Macleod, mentioned young carers. They should have particular attention paid to their needs. In some cases they should be identified as "children in need" under the Children Act, and be supported as such. There are obvious difficulties for young carers who have not the mental experience to cope with many situations they find themselves in. But many of them battle on regardless.
I would be grateful to hear that the Government have identified the area of concern of carers generally and that they will encourage actively some solutions. We all want care in the community to work. Carers are the essential ingredient in any plan and should have all the help we can give them.
I wish to put to the Minister one question. The matter has been worrying me since I heard about it. An elderly couple, one of whom has had to go into a private nursing home, have had to pay part of the fees. Is it the case, when their savings run out, that the family home has to be sold to meet the costs of the private nursing home and that only when that sum has been reduced to about £8,000 is other help forthcoming? That creates an enormous anxiety for elderly couples. I hope that the Minister can lay it to rest.
4.20 p.m.
Lord Thurlow: My Lords, the subject of the debate finds us all in the same boat. It is not a partisan matter. If at some future date we have a change of government they will have the same problems, including that of financial constraints, on their plate. The debate has illustrated the enormous breadth of problems. None in your Lordships' House would question the broad policy objectives of community care that the Government introduced when they decided to implement the Griffiths Report. That was a revolution, and all revolutions cause problems, especially over timing. I am one of those who regrets that the implementation was not done over a longer timespan. The Government delayed introduction for over a year, when it was manifestly impossible for local authorities to take on their responsibilities. I am sorry that the delay was not longer, but that is history.
I shall confine my remarks to two aspects of the subject. The first relates to monitoring and the other to the revolving door syndrome issue to which the noble Baroness, Lady Robson, referred during the debate on the Address. The noble Lord, Lord Brimelow, questioned whether the Department of Health knows what is going on. I should not be surprised were the answer to be that it cannot know everything that is going on because it is part and parcel of the system of delegated responsibility that statistics, and so on, are fragmented. Nevertheless, the NHS, as it acknowledges, is responsible. It has the final and continuing responsibility for medical treatment and medical care. It cannot delegate that beyond a certain point. It is a fundamental responsibility.
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I should like to refer, as evidence of the problem, to what happened some time ago now when a commercial residential nursing home in, I think, Oxford, had a case of homicide which has received a great deal of publicity. Before the implementation of Griffiths the home had catered mainly for homeless people and not sick people. At that time the home was staffed by a young volunteer who was making a social contribution before going up to Oxford. He was on duty by himself for 24 hours with 10 or 11 residents. A schizophrenic patient had been introduced to the home after those responsible for that commercial project became aware that there was a slice of cake to be had from operating in the mentally ill field. During the night that unfortunate schizophrenic patient stabbed the young volunteer who, incidentally, had received no specialised training in looking after the mentally ill.
I have no doubt that in that case corrective action was taken. The point is that that was a residential home responsible for providing difficult care for the mentally ill. It ignored the Department of Health's guidelines on staffing and training. When confronted with the fact that it was ignoring the guidelines, it said calmly that the guidelines were not legally mandatory. I should like the Minister to ensure that in future the guidelines are given greater legal mandatory force. I hope that that will be one of the objects of the legislation to which we look forward.
On the revolving door syndrome, the public perception is—rightly or wrongly—that with the run down of the big mental hospitals and the reduction in the number of acute beds, there is no longer an assurance that those requiring treatment after discharge can always obtain it. I am a parent who has benefited from the past arrangements with big hospitals under which our schizophrenic son could always go back through the revolving door, and I am greatly concerned that there is no longer an absolute assurance that a bed will be available wherever and whenever it is wanted. We should be pleased to have the maximum transparency in this area.
4.28 p.m.
Baroness Gardner of Parkes: My Lords, this has been a most interesting debate, but the only distinction too many speakers have drawn between the NHS and community care is that one pays for one and not for the other. That is a false distinction as the NHS has not been entirely free since 1950 when the Labour Government introduced the first charges for the NHS. People tend to think of the NHS as a hospital service, and that is free, but there are many other aspects of the health service for which patients are means tested and for which charges are made. Priority cases, of course, are still treated free. That point needs to be put to make it clear that that is not the only distinction. There are much greater distinctions to be drawn between the NHS and community care.
Baroness Jay of Paddington: My Lords, I apologise for interrupting the noble Baroness, but surely what we

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are discussing this afternoon is continuing care, and the distinction there is between the free continuing care in the health service and means-tested social services.
Baroness Gardner of Parkes: My Lords, I am sorry that the noble Baroness interrupted, because that is not the usual custom when a debate is time limited. Even so, I could argue about that point because the new dental contract provides for continuing care for two years whereas that did not apply before. There are many points of discussion, but I cannot spare any more time to respond to that point.
The underlying principles of community care are that the care should be patient-focused, not in the self interest of the people providing the care but in the interests of those receiving it. I take into account the points that have been made about carers, who are relevant too. However, as regards community care, the prime consideration is the patient who is receiving that care. The individuals who do not require hospital care should be cared for in their own community. The social services are correctly the fulcrum for the co-ordination of an individual's full range of longer-term needs.
The National Health Service and Community Care Act provides a framework for translating these principles into specific benefits for individuals. At the strategy level, community care plans provide the mechanism for bringing the plans and policies of health services, social services, other local authority services and voluntary and community groups into a coherent strategy. At the level of the individual, case management and assessment procedures, referred to by the noble Baroness, Lady Masham, ensure that the needs of the individual, and not the separate interests of the service providers, drive the delivery of care.
That has led to the development of innovative collaborative arrangements to secure flexible care packages; that is, meeting the needs of the individual, including the carer. Respite care is a most essential and valuable way of ensuring that more patients and carers obtain relief. The philosophy of community care has been embraced by health service providers which have sought to develop new approaches to delivering health care in the community; for example, home dialysis, palliative care teams for the terminally ill and discharge teams. They are examples of collaboration between the health service and community care.
The National Health Service and Community Care Act created a single unified budget to cover the costs of social care. By transferring to social services departments the social security payments for people in residential or nursing homes the perverse incentives for moving people out of their homes and into residential care were removed. The financial flexibility that the Government have provided has promoted the innovative flexibility in the delivery of care.
However, with the level of need in the community and an increasingly older population, there will always be pressure on resources. The community care framework enables individual needs to be identified and provides the flexibility for resources to be deployed in a manner that is responsive to those needs. There has been a great deal of talk about people being asked to
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contribute to their social care. I believe that that is correct and that it should be done on a means-tested basis. Those well able to afford their own care should do their best to do so. Those most in need of financial help should receive it.
I was interested to hear the noble Lord, Lord Brimelow, refer to community care in Camden because my NHS trust is in that area. Today I read the current edition of HealthCare Today which states that the Camden and Islington Community Health Services NHS Trust has a staff of 2,500, a budget of nearly £90 million and serves the communities of Camden and Islington from nearly 100 sites. That was interesting to read because most of us regard community care as a small operation. In fact, it is large and largely successful.
The noble Baroness, Lady Seccombe, said that she was amazed that local authorities had spent their budgets. That does not amaze me because the community care Act has revealed the need that exists. Local authorities in central London had no idea of the vast demands. They were unknown and unmet. No government can afford to meet the financial demands that lie ahead. There must be a need to look at how best to use the resources. I believe that there is an opportunity to use volunteers. The noble Baroness, Lady Lockwood, the noble Lord, Lord Murray, and I are members of the Advisory Council of the Retired Senior Volunteer Programme (RSVP). Recently retired people are keen to carry on working and to fulfil their lives helping others. They can meet a need that cannot be fully met because no government can provide the amount of money that is required to meet every demand that is put on them. I wish to see the gradual use of more volunteers in community care because that would benefit both the patients and the carers.
4.35 p.m.
Lord Hollick: My Lords, I wish to apologise to the House because a prior engagement prevents me from staying to the end of the debate. Today's debate is timely because there is a rising anxiety about the provision of continuing care. There is a financial crises among various local authorities and that will prevent them from meeting their requirements in the current year. There is also a rising anxiety about the diminution in the number of continuing care beds within the health service.
My experience of the problem has been gained from working with sufferers of Alzheimer's disease. As your Lordships know, that is an extremely sad disease. It is a slow journey into an abyss of unknowing and darkness. There is, however, a journey through a "Kafkaesque" world of administration and bureaucracy. The noble Lord, Lord Ashley, vividly mentioned some of the words used in the guidelines and government publications. At a time when carers and Alzheimer sufferers are seeking to deal with a terrible disease—it is usually at the end of their lives —they are also having to find their way through a maze of bureaucracy and administrative chaos.
The journey that I have described begins with the diagnosis of the disease, after which the patient must spend time at home. The carer—the unsung hero of our

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story—looks after that person. Rapidly the time comes when, because no hospital bed is available, the carer is put into a nasty and serious financial position. As a result, the carer's health suffers and his or her future is at the mercy of the social services, which are inadequately funded. As regards the individual, we see the beginning of a war of financial attrition.
That comes as a surprise and a shock to sufferers and carers because, naturally, they expect that having paid their national insurance contributions they are entitled to free health care, particularly at the end of their lives. The Patient's Charter confirms that they are to receive health care on the basis of clinical need, regardless of ability to pay. However, many sufferers find those words to be hollow.
On 15th April the Secretary of State said:
"The NHS provides services for everybody on the basis of their clinical need and regardless of their ability to pay",
thus confirming the Patient's Charter. She continued:
"There are no exceptions to that rule whatever the age of the patient".
The words "clinical need" must be weighed carefully. It is the view of the Royal College of Nursing that continuing care is nursing intensive; in other words, there is a clinical need.
The August guidelines, published by the NHS Executive, confirm that the NHS remains responsible for meeting the needs of people within available resources. However, the words "where appropriate" are then inserted. That condition is causing so many problems and difficulties. The particular problem is that there is no nationally accepted definition that ensures that everyone throughout the country receives the same care and attention. There are examples of some local authorities and health trusts ejecting people from hospital into the care of social services while in neighbouring authorities patients are cared for within the NHS. I suggest that that is unacceptable.
I believe that that muddle is avoidable if there are proper definitions. What we need to do—the August guidelines call for it; and I welcome that fact—is to devise national eligibility criteria to ensure that there is a consistent approach and that it ceases to be a regional lottery. There is also a need for the Government to monitor health authorities to ensure that they are living up to the promise made on their behalf by the Secretary of State.
My concern is that there is no central monitoring of the need for continuing care. I have asked several questions of Ministers about the number of continuing care beds. I have to say that I have been given a number of unsatisfactory answers; indeed, if I were being unkind I would say that I have been fobbed off. I am always told that such information is not collected centrally. The noble Lord, Lord Thurlow, mentioned the difficulty of collecting it. But it is possible to do so. In fact, this very day, I saw an extremely good National Health Service-designed software system which gathers together information centrally about such matters. Therefore, it is possible for the NHS to have that information centrally and then to know whether or not
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the needs and requirements of the community and patients will be met. Without that sort of database, I am afraid that we shall continue in the present muddle.
I have a suspicion that the Government—and, certainly, some local authorities and health trusts—are in fact turning a blind eye to the problem. They are perfectly happy to see people and patients (sufferers) leave hospital and go into community care. By doing that, they know that they avoid the financial responsibility which I believe is rightly theirs.
In my view, it is fair to characterise some of the developments within the National Health Service on continuing care as effectively privatisation by the back door of this part of the health service which affects people at the most vulnerable time of their lives, and at a time when many of them simply do not have the financial resources to pay for it out of their own pockets.
4.42 p.m.
Lord Mottistone: My Lords, I, too, should like to congratulate the noble Lord, Lord Ashley of Stoke, on his introduction of the debate. I am so sorry that he is unwell; I trust that he will get better soon. The timing of today's debate is especially apt for me as Governor of the Isle of Wight. Some noble Lords may have heard from the media recently that we have a real crisis in my island over the financing of our community care. Sadly, that sort of thing, though especially urgent, is not new to the Isle of Wight. It stems from a continuing lack of understanding by officials in all English government departments of the special peculiarities of islands in particular and also, it seems, of authorities with small communities.
I, and successive Members of Parliament for the Isle of Wight, have been grappling with that ignorance for over 20 years. The late Lord Ross of Newport nearly got an important understanding of the problem accepted by Mr. Peter Shore when he was Secretary of State for the Environment in 1979, but the Government fell before the understanding could be reached. I have had two or three similar near misses since with Conservative ministerial friends.
The particular problem is simple to describe. In October 1992 the Secretary of State for Health promulgated a plan for transferring the distribution of moneys for community care from social security to the local authority-run social services, with transitional grants over a four-year period and specified increases year by year over that period. All counties, including the Isle of Wight, made plans accordingly. In October 1993, the then Minister for Health, Dr. Mawhinney, made a statement which indicated that there would be no change in the plan.
However, on 2nd December 1993, almost exactly a year ago, for the Isle of Wight—and, as we now know, for other counties—a bomb was dropped. The Department of Health announced a revised method of calculating for the grant for 1994–95 (the current year) which slashed the Isle of Wight's expected grant by over half. The Isle of Wight County Council and its social services director reacted sharply. They wrote within a week to officials of the Department of Health saying that such a large, damaging, downward change could

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not be handled and repeated those letters in January. My honourable friend, Mr. Barry Field, the Isle of Wight MP, arranged a meeting with my honourable friend Mr. John Bowis, the responsible Minister, just before Christmas last year.
There was no response to the letters and no helpful outcome of the meeting until February when an official of the Department of Health wrote to say that, inevitably, a change in distribution mechanism involved both winners and losers. Some authorities, like the Isle of Wight, would be losers. Effectively, that letter said, "Bad luck old boy, better luck next time". Just how callous can you get? There was no thought for the effect on the old people of the Isle of Wight who were those principally affected.
The grumbles continued throughout the year; I shall not bore your Lordships with the details. But at no stage did the Government do anything to show that they recognised the acute problem of the Isle of Wight and propose some way of alleviating it. So, in mid-November, in exasperation, the Isle of Wight County Council announced to the press that it had only three weeks of community care money remaining as it had warned the Government a year before and throughout the year thereafter. I was gravely distressed by that publicity and told my county council friends so. Inevitably, the effect was to frighten seriously some of the old people of the island. I received letters from the clergy telling me that their parishioners were seriously worried about what might happen.
So what then to do? The Isle of Wight County Council has had a clean bill of health from the district auditor on the spending of its community care money to date. For the future up to March, it has arranged to transfer as much money from other resources as it dares—fewer road repairs for example. Let us hope that there is no snow this winter. It has asked the district auditor to report on all its expenditure during the past year so as to show the Government that it has acted as wisely as it knows how.
The problem is that small communities do not have so much money to reallocate when they get surprises. I expect several of the new unitary authorities—like, as I have discovered, the smaller London boroughs, which have populations not terribly dissimilar to the Isle of Wight—will discover that. Moreover, islands have their own special problems. For example, our fire brigade cannot expect support from adjacent authorities in dealing with major fires. My noble friend Lord Ferrers, when at the Home Office and responsible for fire brigades, had a long and enduring battle with the Department of the Environment to persuade those concerned that our arguments made sense. He was terribly frustrated and never finished the argument; for look where he is now.
What is needed is a quick, fresh look at the Isle of Wight's special problems by the Department of Health and action before Christmas to adjust the transitional grant for this financial year upwards by as much as is necessary. There is need also to ensure that next year's grant is enough. I suggest that anything less would be a grave dereliction of duty on the part of my noble friends responsible for that part of the world. I tried to get a
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warning through to my noble friend the Minister who is to reply to the debate that I intended to say such things. I hope that she will be able to give me some reassurance that something will happen between now and Christmas.
4.50 p.m.
Lady Kinloss: My Lords, I should like to thank the noble Lord, Lord Ashley of Stoke, for introducing this debate today. In 1988, a report to the then Secretary of State for social services by the late Sir Roy Griffiths was first published entitled, Community Care, Agenda for Action. Since then questions have been asked and the subject has been debated, and six years later we are still discussing the best means of ensuring that care in the community is working.
Age Concern fears that some local authorities appear to be defining the need to enter institutional care on the basis of the cost of the care package which would be required at home. They say they are unclear how this apparent move towards resource-led assessments fits in with the underlying theme of Caring for People: Community Care in the Next Decade and Beyond, published in 1989, which suggests that assessments should be needs-led and not resource-led.
The Association of Directors of Social Services welcomes the opportunity to comment on the draft guidance issued by the NHS Executive in August 1994 and welcomes the recognition that there is a need for guidance in clarifying responsibilities for long-term health care. Surely it is vital to decide which authority is responsible for which need, as this is necessarily a cause of financial concern and possibly a cause for confusion and worry for not only those trying to provide services but those on the receiving end. It would surely help those supplying different needs if it could be defined more precisely what constitutes continuing and specialist medical or nursing supervision and in what circumstances these definitions apply.
In the draft guidelines, Health Service Guidelines, the paragraphs dealing with hospital discharges of people with long-term health and social care needs worry families who are unsure of what they are entitled to in the way of help. Patients and their families need to be fully informed about how the procedure will work, and whom to ask about their needs. Can the Minister say whether any local authority or health authority has produced a small pamphlet explaining what is available for long-term care, whether in a nursing home or residential care home, which should also include information of the financial implications of each option? Perhaps the social services and health authorities should produce a small, easily understood pamphlet with guidance on what one can have and where to ask for the information.
The Alzheimer's Disease Society has found that there are about 17,000 younger people with Alzheimer's disease in Britain today. It is extremely rare for it to occur in young people under the age of 30. It is increasing, though, in people under pensionable age. The greatest worry seems to me to be those developing it in their 40s and 50s, who have young families, and who see their parent with this disease. It must frighten children when the parent gets progressively worse. A

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survey reckons there are 17,000 younger people under 60 out of 635,000 people who have the disease. There is only one consultant who has a special responsibility for younger people, and he resides in Liverpool.
The Alzheimer's Disease Society says there is a likelihood of between 50 and 100 younger people in every health district who have Alzheimer's disease. I ask the Minister to look into this apparent lack of focus on this most important aspect of care in the community, because of its knock-on effect on young families. Even those in their late teens will be affected by it. Will the Minister also ask health authorities to assess the needs in their districts of these younger sufferers from Alzheimer's disease? Does the Minister agree that there seems to be a need for more consultant specialists in this field, and not just one?
The noble Lord, Lord Ashley of Stoke, spoke of people being discharged from hospital and only living for a few weeks. Often they would wish to stay in hospital which represents a safe and caring place for them to stay, where they are looked after and may die in dignity. If a patient's wishes are to be considered, surely this is a small but very important consideration for the happiness of those who may not have long to live. I hope that one day community care will work as the late Sir Roy Griffiths hoped.
4.54 p.m.
Baroness Eccles of Moulton: My Lords, society's responsibility for organising appropriate care for the growing number of elderly people is a major policy issue confronting all countries of western Europe. It can rightly be seen as one of the yardsticks by which a civilised society can be judged. I am grateful to the noble Lord, Lord Ashley of Stoke, for giving us an opportunity to debate this important subject today. I am sorry that he is in pain and is unable to be with us.
Since the 1980s there has been a dramatic increase in the level of funding provided by the Government for long-term care generally and for elderly people in particular. This is reflected in the substantial growth of the nursing home sector, and as a result the number of beds run directly by local authorities and health authorities has declined.
Over the past decade the growing number of elderly people needing nursing home care have felt enormous benefit from this change in delivering services through the voluntary and independent sectors rather than through local government and health authorities. However, although the running of these services has now moved predominantly into the independent sector, it is important to emphasise that this remains an area of care mainly funded from the public purse. As my noble friend Lady Gardner of Parkes has already mentioned, contributions from those who can afford it have been a longstanding feature of our system, not a recent phenomenon.
In turning to the more recent history of community care, I would like to pay tribute to the foresight and tenacity with which the late Sir Roy Griffiths worked with the Government to introduce the new arrangements. In April 1993 the progressive transfer of
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funding from central Government (that is, the Social Security fund) to local government began. When the transitional funding period of four years is completed, the budgets of social services departments in local authorities will have been increased by about 40 per cent.
The health authority of which I am chairman—here I must declare an interest—is coterminous with three London boroughs—Ealing, Hounslow, and Hammersmith and Fulham. All three boroughs have taken on these additional responsibilities with enthusiasm and commitment. In the 18 months since the new arrangements came into being the number of patients in hospital awaiting transfer to nursing homes has reduced.
These developments in the care provided for elderly people have produced many visible benefits and we can take great pride in them. However, I believe that there is a need for a stronger regulatory framework. Local authorities and health authorities need effective powers to make sure that the standards of care provided in the independent and voluntary sectors are those that you and I would wish to see for our own elderly relatives. The current registration and inspection regulations, while allowing health and local authorities to exert considerable control over the physical standards of such homes, are at present relatively ineffective in ensuring that adequate standards of care are provided by staff.
Another important area is being considered at present through a draft circular issued for consultation by the Department of Health. This circular is not the one to which the noble Lord, Lord Ashley of Stoke, particularly referred; it is a second circular which is out at the same time. This circular discusses the financial framework within which health and local authorities operate. At present we are relying on financial arrangements drawn up in two Acts dating from 1968 and 1977.
In response to consultation on this draft circular my authority has taken the view that new financial arrangements are needed which will allow local government and health authorities to reflect the reality of the care that so many elderly people need, which is a combination of health and social care. Furthermore, the same elderly person may, over time, require different proportions of the costs of his or her care to be met by local and health authorities. In many cases on admission to a nursing home it is appropriate for costs to be met by the local authority. However, towards the end of the person's life the health service should in many instances be providing a good deal of the care and meeting the costs.
We recognise that inevitably the boundaries of the NHS have been changing ever since it was created nearly 50 years ago. Community care policies have resulted in better care for elderly people, albeit now predominantly provided outside the NHS. At the same time funding in the NHS has increased dramatically over the years and there are many areas where the boundaries of the NHS have expanded. If I had time, I would have liked to have cited some of those. The concept of the next generation contributing to the costs of caring for their elderly relatives is being faced by many European

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countries. So too is the issue of how far individuals should make financial provision to allow for the cost of their own long-term care to be met through insurance or other arrangements.
In conclusion, I believe that we can be proud of the developments in community care which have taken place in recent years and which now provide, still it must be emphasised mainly through public funds, far higher standards of care and infinitely improved physical facilities. However, like all great social issues, it needs periodic reassessment. I believe that we have a particular responsibility to inform and guide the development of policy in this fundamentally important area of life. I very much hope that the new guidance referred to earlier, in its final version, will not miss the opportunity to provide a financial framework which matches the excellent multi-disciplinary service which we are committed to delivering.
5 p.m.
Baroness Farrington of Ribbleton: My Lords, I am grateful to my noble friend Lord Ashley for introducing this subject and providing the opportunity to discuss the very real problem which people face.
I agree with the noble Lord, Lord Jenkin, that it would be possible to debate at great length the many examples of success in the field of care in the community. I am particularly grateful to those who have referred to the fact that we are not speaking about an additional amount of public expenditure but a switch of resources from one public expenditure head to another, a transfer of funding from social security into care in the community through the local authorities.
It is extremely important that in this debate we recognise that care in the community could only ever be a success were it to be conducted against a background of the recognition of need and not against a background of a reduction in public expenditure. In addition, for there to be faith between the partners who were to work together, it was essential that the Government recognised that when local authorities told them that in the current financial year the sum that was needed was £1.2 billion to be told that £0.7 billion was all that was available, leaving more than a 40 per cent. shortfall, would inevitably lead to the problems to which the noble Lord, Lord Mottistone, referred.
In the current year an additional problem has been faced by some authorities. Because of a late switch, without consultation, which was mentioned by the noble Lord, Lord Mottistone, the money which was expected by some local authorities was suddenly cut dramatically. The authority of which I am a member—Lancashire County Council—was in that position. A late decision, announced without consultation, left only £6.5 million for new demands during the current year.
It is against that background of not being able to meet new demands that we must view the problem of the blurring of the distinction between that which is clinically determined to be health care and that which is rightly the province and the responsibility of the local authority social services departments.
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As a new Member of your Lordships' House I listened very carefully to all the expressions that have been used. The one that causes me gravest concern is the constant reference by Members on the Government Benches to "having regard to resources". We are discussing people who are clinically determined to be ill and in need of health care. The decision as to whether that health care can be provided by the health authorities free of charge within a different setting from the hospital is to be governed by judgments about resources and not clinical judgment.
I remember when care in the community was first discussed. I happened to be with a friend who is older than I am, whose husband was in a long-stay mental hospital suffering from Alzheimer's disease. To my surprise and distress, she burst into tears. I asked what the problem was. Her prediction was that the hospitals would be closed down without alternative provision being made. She predicted that the government of the day would use the resources from the sale of assets of the long-stay psychiatric hospitals, in one of which her husband was a patient, to fund other policies, and there would not be a clear and distinct switch of that money into funding for other services.
My friend feared that she would see the day when she would be forced to give up her small savings and her ownership of her home in order to help to fund the cost of caring for her husband were he not in a hospital. Her ultimate distress was her fear that she was asking for her husband to be kept in a place which was not the most appropriate because she could not cope with the changes that she feared.
I worry because I reassured my friend that there would never be a question of curtailing resources for patients with Alzheimer's disease and there would never be an attempt to place a charge on their families in order to fund their care, either in the community or in alternative residential accommodation other than a long-stay hospital. Her husband is now dead, but if I were to give advice to someone else in that position today I might be more constrained in my enthusiasm.
We do not face the future with hope in those authorities which are struggling to find the resources necessary to make care in the community work. Gloucestershire, Lancashire, Hereford and Worcester, Bury, Bradford and all the authorities on the Isle of Wight have problems. The noble Lord, Lord Mottistone, was so right when he referred to the problems of the Isle of Wight. I ask the noble Baroness not to say, in answering the debate, that it is a matter of local authorities using their judgment in respect of their own resources.
The Isle of Wight has been challenged by a Government Minister for underspending on education against its SSA. It has been told by the Home Office—the noble Earl, Lord Ferrers, was mentioned—that it must spend more than its SSA on fire services. Now, doubtless it will be told that if only it switched funding from somewhere else it could cope with this unexpected

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pressure on its social services. It is critically important that the Government recognise the need to fund care in the community.
5.7 p.m.
Lord Ashbourne: My Lords, I have been asked by the noble Baroness, Lady Ryder of Warsaw, to speak on behalf of the Sue Ryder Homes this afternoon as the noble Baroness is unfortunately unable to be in your Lordships' House in person this afternoon owing to a series of previous engagements. She has asked me to thank the noble Lord, Lord Ashley of Stoke, for putting down today's Motion and for giving your Lordships an opportunity to discuss these critical matters.
The nub of the matter is that the noble Baroness is greatly distressed by the effect that the implementation of the National Health Service and Community Care Act, which came into force on 1st April 1993, is having on the finances of the Sue Ryder Homes. Perhaps I may refer to one of the Sue Ryder Homes budget reports. It states:
"The income from fees is only marginally above that of 1993 despite intensive negotiations with Social Services and Health Authorities. The Home has 35 residents which receive only basic income support which cannot be increased. This arises because the residents have been in the Home for some time and are not affected by the new regulations … Consequently it is not possible to obtain top-up payments from Social Services or Health Authorities or from the Department of Social Security. In most of these cases, the amount received is £356.95 per week, but some are only £290. Since these have been long-term residents, the majority require substantial nursing and would be clearly in the middle or upper fee band—£500 or £575 per week. The shortfall of income over expenditure is therefore approximately £350,000 in a year, so in this Home of 35 residents, about £10,000 per resident".
I apologise for the length of that quote, but it seemed important that the Minister had the information in some detail so that she can reply. I understand that out of 24 Sue Ryder Homes in Britain, this affects 14 of them. Consequently the average deficit amounts to £120,000 per Sue Ryder Home.
It has been estimated that the losses resulting from the Government's decision only to partly fund those patients who were in Sue Ryder Homes before April 1993 currently amount to £1.7 million per annum. That figure is likely to increase in future years as the disabilities of those patients increase and government funding is frozen.
Potential residents of Sue Ryder Homes are either being kept in acute hospital beds, or at home, without nursing care, rather than going into Sue Ryder Homes where the basic social services funding is insufficient to cover the costs. With the finances of social services in many counties being overstretched, it will not be long before the welfare and wishes of potential residents are ignored in favour of the cheaper option. For example, Cambridge social services are forecasting an overspend of approximately £3 million and have started to cut back on funding, including for respite beds which are urgently needed by desperate patients whose families or neighbours simply cannot cope any more.
As I was unable to give the Minister more than the most cursory notice of those concerns and questions perhaps she will write to the noble Baroness, Lady
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Ryder, and myself giving the Government's views on the multiplicity of problems which affect the Sue Ryder Homes.
5.12 p.m.
Baroness Robson of Kiddington: My Lords, I, too, wish to thank the noble Lord, Lord Ashley, for introducing the debate. I add my best wishes for his recovery from his present problem.
We have had 17 speeches. Those speeches leave no one in any doubt that confusion exists about who is responsible for providing long-term community care in our society. In the past, we have asked the Government for guidelines. They have now issued guidelines. However, in my view those guidelines have done little, if anything, to clarify the situation.
I regret the lack of specific national guidelines. It means that access to long-term care now depends on where one happens to live, not on what one needs. It also means that standards vary enormously between different authorities. The guidelines seem even to encourage different standards. On page 2, the guidelines state:
"Different models of care may be appropriate in different parts of the country".
I can understand that. But they also provide the escape clause that, because one cannot afford it, one does not have to keep up to the national standards laid down by the Government.
When we changed the emphasis from hospital to community care, most of us agreed that it was the right move to make. We have since moved away from the principle of an NHS which is free at the point of need. The noble Lord, Lord Ashley, referred to the large decline in numbers of long-term care beds in the NHS. In 1990 the figure was 73,000; in 1993 it was 59,600. Before the implementation of the community care legislation, large numbers of elderly people were transferred to private nursing homes. Many of them have now become the responsibility of their local authority. At the risk of being boring, I wish to emphasise yet again that we should have introduced the community care legislation before we started the reform of the NHS so that we did not run the risk of a large number of people being without adequate support. Perhaps I may plead with the Minister that there should be no further reductions in hospital beds or long-term care until the problem has been resolved.
The final paragraph on page 2 of the guidelines refers to the need for hospitals to take account of the needs of other patients in deciding how long a patient can stay in an NHS bed. Of course, one can understand that if and when the number of beds is reduced to such an extent that there are not enough, long-term patients may have to be given alternative accommodation. But that is because we have failed to provide them with long-term beds in the NHS.
Some long-term patients in the NHS regard such a place as their home. How does the removal of patients from the place in which they are presently being looked after fit in with previous guidelines which stated that,

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"no NHS patient should be placed in a private nursing home, or residential care home against their wishes if it means that they or a relative will be personally responsible for the home's charges".
A large number of elderly people are cared for at home by relatives or friends. When they require greater care than can be provided in their homes and are referred to a nursing home—almost all of them now private homes—those elderly people are means tested to see what they can afford to pay. It is not only what they can afford to pay, but what their relatives can afford to pay. Occasionally the result is the sale of the patient's home. The former carer —in many cases someone aged between 70 and 80—who has lived in that home all his life, stands the risk of losing it. Some private nursing homes have helped patients to stay without forcing the sale of the house. However, when the patient dies there is frequently an enforced sale of the home in order to pay off the debt incurred in the nursing home. Those are earth-shattering experiences for people. We must do something to solve the problem.
The guidelines, under the heading "Action" state:
"Health authorities, and … GP Fundholders, are required to review, in consultation with local authorities … their policies for meeting long term health care needs".
That is right. They are the people who look after those in the community who need long term care. But up to the present time GP fundholders have not had any responsibility for residential nursing care, although they have responsibility for district nursing service care. If GP fundholders are to be made responsible for the provision of residential nursing care they will need to have their budgets increased. Without that they will be unable to perform their duty.
I began by saying that guidelines must contain nationally determined criteria about who is eligible for NHS continuing care to avoid discrepancies in care between areas. Above all, the Government must acknowledge that increased finance will be necessary because the number of people who require continuing care is increasing year by year. The funds must be made available.
Yesterday, we had an announcement of an increase in funding for the National Health Service. That is very welcome. I plead with the Minister that a large part of that funding should be devoted to long term care in the community, whether provided by the NHS or by local authorities.
5.21 p.m.
Baroness Jay of Paddington: My Lords, I should like to give my particular thanks to my noble friend Lord Ashley for his great personal courage in introducing the debate on this crucially important subject this afternoon. I am sure I am joined by noble Lords all round the House in wishing him a speedy recovery.
In his powerful opening speech, my noble friend showed his customary deep concern for vulnerable people—and vulnerable people is what this debate is about. Although the words on the Order Paper could suggest that we are discussing rather arcane complexities of local and health authority finance, what in fact my noble friend and many other speakers have
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vividly demonstrated is that the Motion reflects the considerable alarm felt, certainly on these Benches and I think all around the country, at the way in which those who are most in need in our society are being treated following the changes in the NHS and community care. The fear is that we are seeing what has been described by the Association of Metropolitan Authorities as,
"the stealthy withdrawal of free health care".
My noble friend Lord Hollick repeated the quotation from the remarks of the Secretary of State for Health on 15th April this year:
"The NHS provides services for everybody, on the basis of their clinical need and regardless of their ability to pay. There are no exceptions to that rule".
The problem is that what the Government have done is simply to redefine words like "services" and "clinical need" to suit their new legislation. As we have heard from several speakers, health authorities and social services are now required to differentiate, on what often seems an almost arbitrary basis, between health and social care, and, as we have also heard, that has serious financial implications.
We had another Labour debate on community care in your Lordships' House earlier this year and we predicted that there would be an acute crisis as social service departments literally ran out of money to finance their new responsibilities. My honourable friend Mr. David Hinchliffe tabled an Early Day Motion in another place just recently on the Government's failure to fund the new social responsibility adequately. I should like to thank my noble friend Lady Farrington and the noble Lord, Lord Mottistone, for highlighting the problem so authoritatively and cogently in your Lordships' House today.
The fundamental uncertainties which we are discussing are caused by the Government's determination to see the essentials of service provision and finance resolved exclusively at a local level. Ministers argue that this is an appropriate devolution of powers and the way to ensure that local needs are met most effectively. On these Benches, we see this more as the Government abrogating their national responsibilities and creating a situation where cost-shunting between individual health authorities and social service agencies leads to patchy provision and considerable inequity.
As the noble Baroness, Lady Robson, has just pointed out, the quality of long-term continuing care now depends on where you live and not on what you need. We could have no clearer evidence that the nationwide security of the National Health Service is disintegrating and, in my view, being replaced by the small business ethics of local hospital trusts and independent providers, many of them in the private sector.
There have been many demands for the Department of Health at least to set national standards for continuing care and, as several speakers have mentioned this afternoon, we have now seen new draft guidelines from the department which were issued this summer. The consultation period has now closed and the responses from both the voluntary and the statutory sectors must make gloomy reading at the Department of Health. The

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general tone of the response is summarised by one London health authority, and I quote the chief executive's written reply:
"The guidance claims to clarify but in our view, it leads to greater confusion".
I make no apology for going over some of the details of that guidance again this afternoon and the main points raised about those guidelines during the consultation. I hope that when the Minister replies she may be able to answer some of the very practical concerns which have been raised by organisations outside your Lordships' House and echoed in contributions this afternoon.
As my noble friend Lord Ashley stated at the beginning of the debate, the guidelines state:
"The NHS remains responsible for meeting"—
with this extraordinary caveat—
"within available resources, the needs of people who require long term physical or mental health care".
As he also said, superficially this seems to restate the basic understandings about NHS responsibilities. But the alarming caveat about "within available resources" suggests that decisions about individuals will be driven more by financial priorities than by clinical needs.
In the next paragraph the document produces another caveat:
"Different models of care may be appropriate in different parts of the country".
As the noble Baroness, Lady Robson, has just mentioned, that could lead to local flexibility. But Age Concern and other organisations have argued in their response that:
"to include matters such as local circumstances and resources in the guidelines makes it likely that decisions about care will be dominated by the concerns of managers and not by medical judgements".
The problems about precisely defining those who require physical and mental care are, of course, central. Several noble Lords pointed out that the guidelines do nothing to help.
How does the Department of Health define,
"those with complex or multiple care needs"?
Who do we say will qualify for,
"continuing and specialist medical or nursing supervision"?
Surely to be of any use at all the guidelines must, as several speakers have said, give specific national eligibility criteria which can be applied by every purchasing health authority, every social services department and every provider in the country. I should be grateful if the Minister could elucidate some of the definitions in her reply and also explain the force of the provisos in the guidelines about "local circumstances" and "resource contraints".
The other major area of concern which again has been much referred to this afternoon is about hospital discharge, about how decisions are taken to discharge any patient from health service care into means-tested social care and, very importantly, what rights and choices a patient and his or her relatives have when
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those decisions are taken. Once more, the draft guidelines are frankly bald and unhelpful, and I quote from page 2:
"Where a person, in the view of the consultant … no longer requires acute treatment but is likely to need intensive long term support, including the possibility of nursing home or residential care, they should be eligible for a multi-disciplinary assessment of their needs".
Rightly, the British Medical Association and the Royal College of Nursing are unhappy that the paragraph seems to suggest that "acute treatment" can be properly defined as medical care appropriate for an NHS hospital, but that, "intensive long-term support", possibly in a nursing home, is seen as social care. Frankly, once more the problem is one of inexact definition, with all the ensuing and important complications of free versus means-tested treatment.
Under the same heading, "Hospital discharge", the guidelines raise but do not answer the difficult question of patients who refuse options for care outside the health service. Again, I do not apologise for repeating the quotation that was given by my noble friend Lord Ashley; namely, that,
"the health authority and hospital will need to take account of the needs of other patients in determining how long the person can continue to occupy an NHS bed".
Again, there are no eligibility criteria, and, as many of those who have been consulted have pointed out, there is an implication that patients could be forced to leave an NHS bed against their will.
Very importantly, there appears to be a contradiction between these draft guidelines and a previous circular which was issued five years ago—HSG (89/5)—which I understand is still in force and which states that:
"No NHS patient should be placed in a private nursing or residential care home against his/her wishes if it means that he/she or a relative will be personally responsible for the home's charges".
When the Minister replies perhaps she can tell us whether that circular is to be withdrawn and whether the new guidelines in their final form will be clear about the choices that are available to patients and their relatives.
Overall, I can only echo the views of the AMA, the purchasing health authorities, Age Concern, the BMA and RCN, the Alzheimer's society, the Association of County Councils and many others that the new guidelines have simply added to the confusions about long-term health care which were created by the new Acts. The UK Central Council for Nursing, Midwifery and Health Visiting has gone slightly further. It has written to the Department of Health urging that a completely new text be prepared for further consultation. Perhaps the Minister will tell us this afternoon if that is what will happen.
It is possible to establish clear eligibility criteria for continuing NHS care, and I am pleased to report that the health authority of which I am a member has successfully done that in conjunction with our local social services departments. Clinicians, social services assessment staff and care managers were involved in developing a written statement which is based on using the so-called Bartell indices of physical and mental capacities. If you qualify on those grounds, you are eligible for NHS continuing care facilities. It has been

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pointed out to me that the success of this system is not based just on the formal protocols, but on strong, practical day-by-day working relationships, with regular meetings on individual assessments. It has meant that the health authority and the social services departments have not had to use the agreed arbitration procedures at all in the past 18 months.
When I asked the chief executive of the health authority for his views on that model, he told me that he had no doubt that it could be of much wider application; and interestingly, the Health Services Journal annual awards have just given a commendation to that initiative as one that could be worked on a national basis. It seems to me that it can only be dogma about local autonomy or, perhaps more sinisterly, about undermining the national quality of the health service which prevents the Government insisting on similar criteria across the country.
At the Conservative conference in October, the Prime Minister defended his support for a comprehensive NHS by asking,
"Is it likely that I would take away the security of mind that was of such value to my parents?".
Sadly, that is precisely what is happening. On Monday of this week, the Association of Directors of Social Services held a national conference which it called "From the Cradle Almost to the Grave". If that is not to be a true description of all our care services, the Government must act quickly and decisively—not only to help health and social service professionals but, most importantly, to restore security of mind to our most vulnerable citizens.
5.34 p.m.
Baroness Cumberlege: My Lords I am very grateful, too, to the noble Lord, Lord Ashley, for raising this very important subject for debate this afternoon. Like the noble Baroness, Lady Jay, and other noble Lords here this afternoon I hope that his courage will be rewarded and that he makes a speedy recovery. I am also very grateful for the very thoughtful contributions that were made by many of your Lordships who I know have personal expertise and experience in this particular field. I will try to respond to the various points which have been raised.
The noble Lord, Lord Ashley, is right in highlighting that, ever since the creation of the welfare state, there has been a division in responsibility between the National Health Service and local authority social services—a division between people who need medical and nursing expertise and those who need support and help with everyday activities. Ever since the creation of the welfare state, people who have been cared for by the NHS have received clinical care free at the point of delivery, while social services have been able to seek contributions towards the cost of care, and have done so, from the people who can afford it.
As my noble friend Lady Seccombe reminded us with her usual clarity, this boundary between health and social care is not new. It has been well recognised and has been part of our system since 1948. Although sometimes difficult to define, it is recognised by those responsible for planning, purchasing and delivering
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care. It has been recognised, too, by governments and by other commentators. Indeed the recently published report of the Social Justice Commission established by the Labour Party with some Liberal Democrat membership states that:
"Although the dividing lines between treatment and care can be difficult to agree, the distinction offers the basis for a clearer approach to funding."
And it goes on to say:
"Given the many demands on resources, however, it is not feasible to extend the founding principle of the NHS—that treatment should be free at the point of use—to the comprehensive provision of care and help with everyday activities."
While a boundary in the division of responsibilities between the NHS and social services is necessary, it need not jeopardise a sensible and comprehensive service to individuals. Many people will need both health and social care and will want to move from hospital into a nursing or residential home or indeed, with enough support, return to their own familiar home with friends and relatives around them. It has always been a challenge, both for governments and for agencies, to improve collaboration between health and social services and to ensure that people benefit from a seamless service. Local health authorities working closely with social services and the private and independent sectors have achieved some notable successes—as was outlined by some noble Lords here this afternoon—but only in some parts of the country. In others, we know, there has been room for improvement.
The need to strengthen local collaboration has been a central feature of the community care arrangements. Local authorities have been given the lead responsibility and it is essential that they work closely with the NHS and other agencies such as housing, in planning and commissioning services, in assessing individuals needs and in arranging the support necessary to meet those needs.
We have strengthened the incentives for close working by requiring local authorities, as a precondition to receiving the Community Care Special Transitional Grant, to reach agreement with their local health authorities, not only in the arrangements for hospital discharge but also in clarifying their responsibilities for long-term care.
It was only 18 months ago that the new community care arrangements were introduced, and we have been encouraged by the progress already made. This is a view endorsed by the Association of Directors of Social Services, which has repeatedly declared the first year of community care to have been a success. My noble friend Lady Macleod of Borve was absolutely right. It is clear that people are being offered more choice and appropriate support. She is also right in saying that more people are choosing to stay in their own homes.
Not only are more people being cared for in their own homes, but 10 per cent. of people who would have gone into a care home under the old arrangements are now being supported in their own home. Health and local authorities are working together to offer more imaginative support which is tailored to meet the needs of individuals and their families and carers. We are witnessing schemes which involve arranging for

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someone chosen by the dependent person to visit in the morning to get them up, to cook meals during the day or to help with gardening or shopping—whatever is needed to help preserve a person's independence and allow them to stay at home. These schemes are flexible. As my noble friend Lady Gardner of Parkes advocated, some involve volunteers; others are funded by local authorities.
My noble friend Lord Jenkin of Roding is also right when he says that we should not underestimate the work and effort which has been invested by local social services departments and health authorities to achieve these changes. His view is endorsed by the independent Audit Commission and the Association of Directors of Social Services, as well as the department's Social Services Inspectorate and the National Health Service Executive. They have all confirmed that the careful preparatory work undertaken prior to the Act coming into force has meant a sound start in most places.
The noble Countess, Lady Mar, suggested that the community care Act was not welcomed. That was not so.
The Countess of Mar: My Lords, I am sorry to interrupt the noble Baroness. I did not mean to imply that the Act was not welcomed. It is very welcome and working well in a great many parts of the country. Just a few are not getting the funds to meet their liabilities.
Baroness Cumberlege: I am grateful to the noble Countess. I misunderstood her. I thought she said that it was a question of, "We told you so". Clearly I misrepresented it. I shall look it up in Hansard. It is a policy that has been widely welcomed from many quarters.
The noble Countess suggested that the community care grant was not ring-fenced. It is ring-fenced. She also highlighted the difficulties in some shire counties which are experiencing some of these problems. I should like to issue a word of warning here to local government. I feel that local government needs to be careful. There is a body of opinion in this country which does not want local government to be responsible for community care. It is not a view that I share. I spent 28 years in local government and I know its value, especially when an authority is well run. But, if people lose confidence in local government's ability to deliver services, especially within increased resources, the temptation to review its new responsibilities will be very great. I for one would be sorry if community care were thought to be an inappropriate responsibility for local government.
Turning to resources, local authorities have been well funded to meet their new responsibilities. Over £1.2 billion has been made available this year, which includes £20 million extra for respite and home care. Next year the budget will be over £1.8 billion for community care alone, which will include an extra £30 million allocated for home and respite care. Those are substantial increases by anybody's standards. They mean that since 1990–91 the total resources for social services, including community care, will have gone up
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from £3.6 to £6.4 billion, an increase of 48 per cent. after allowing for inflation. There is no local authority which has not had increased resources.
No one hearing those figures could doubt the Government's commitment to resource community care fairly. The noble Baroness, Lady Farrington, will know from her close connections that local authorities fought hard for those new responsibilities. They now have the task of carrying them out successfully. The vast majority are doing so and as a result are making a tangible difference to the quality of some very dependent people's lives. But one or two are finding it difficult to cope with the range of their new responsibilities and the need to plan their spending over a full year taking into account the build-up in the numbers of people whom they are supporting.
The noble Lord, Lord Ashley, was right to highlight the damaging effect of squabbles between agencies. My noble friend Lord Jenkin also reminded us of what can be achieved when people are imaginative and determined and work effectively together. When that does not happen, it can be disastrous, as the Health Service Commissioner's report concerning the Leeds case illustrated. The Government took that report very seriously. The commissioner was critical of the fact that the health authority failed to secure long-term health care and inappropriately discharged a very severely incapacitated man who had had a stroke. Although the health authority's action took place before the introduction of the community care reforms, we considered that the report raised wider issues. In the summer we issued draft guidance for consultation which reminded health authorities of their responsibilities for securing long-term care, an issue which has been widely discussed this afternoon.
The draft guidance, as we hoped, stimulated debate— a national debate. We received many thoughtful replies to our consultation paper, which will influence the final version of the guidance. But there have been some misunderstandings and misinterpretations of the guidance and I should like to take this opportunity to correct them.
First, I can assure the noble Baroness, Lady Jay, that it was not our intention to change the responsibilities of the NHS for long-term health care but to reinforce them. We are clear that health authorities do have a responsibility, which includes long-term in-patient care, whether in an NHS hospital or funded by the NHS in the independent or private sector. Following this guidance, all health authorities will be required to review their arrangements and to ensure they are securing adequate provision. If they are not, then we shall insist that they make the necessary reinvestment. I understand the dilemma which the noble Baroness, Lady Robson of Kiddington, and the noble Lord, Lord Hollick, outlined in terms of standards.
Secondly, we are setting a clear framework at the centre, but it must be right that health and local authorities, working closely together, should determine precisely where local responsibilities lie and who will fulfil them.

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Local services will always vary depending on the facilities available. For instance, in some areas services have been centred around an old long-stay hospital; in other areas such a facility has never existed. In some areas the independent sector is well developed; in others it is almost non-existent. It is right, therefore, that local people, who know the strengths and weaknesses of their communities, should decide in close partnership with the populations that they serve what is provided and where. That is the whole principle of population needs assessment.
Thirdly, we are interested in transparency, an issue that was raised by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Thurlow. After local policies have been developed in consultation with local interests—local authorities, providers of services, GPs, voluntary organisations and other representatives of users and carers —the draft guidance states that a clear statement must be published by them which offers local people an explanation. We agree with the noble Lord that people need to know on what basis doctors and other professionals involved in individual cases will take decisions. They need to know the eligibility criteria for long-term care.
Finally, the draft guidance emphasises the need for clear policies in hospital discharge. For many patients, leaving hospital is a straightforward event involving, probably, an out-patient appointment and a follow-up visit with their GP. That is not the case if people are not able to support themselves at home. They may need to be cared for in a residential or nursing home, or require a range of services in their own home for a long period of time. Those decisions are important and far-reaching. They need to be made not only by the vulnerable person concerned but by their family and their carers.
We have required health and local authorities to reach agreement on integrating hospital discharge with local authority procedures. Recently, we have produced and issued widely the practical Hospital Discharge Workbook, which sets out ways in which arrangements for hospital discharge can be reviewed and improved, recognising the key roles of different agencies and the need to take full account of the needs of patients and their families. In addition, the draft guidance reinforces a number of issues for health authorities and hospitals which must be taken into account. Finally, we shall continue to look at this area closely in our monitoring of the new community care arrangements. In the light of the national debate we want to finalise this guidance soon. I can assure your Lordships that the views expressed this afternoon will be taken into account. In an attempt to answer specific questions, I feel that it would be wrong for me to pre-empt the final document, but I do not believe that it will be possible to give my noble friend Lady Eccles the assurances that she seeks in the light of it requiring new legislation.
The noble Lord, Lord Brimelow, raised the issue of Camden and Islington district nursing services. I am always very reluctant to comment on individual reorganisations unless I have had the opportunity to talk to those involved, both staff and their managers. Whether the current workforce is of the right capacity in terms of numbers or of the right level of skill is
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impossible for me to judge. I shall certainly write to the noble Lord. I am sure that he will also be interested in the views of my noble friends Lady Gardner and Lord Jenkin of Roding, who have experience of these issues.
The noble Baroness, Lady Masham, after giving a very moving account of a particular case—I am pleased to say that such a case is very unusual—raised the issue of time limits for assessing individuals. We recognise that in some areas there are lengthy waiting times for assessments, especially by occupational therapists. We take that matter seriously and the Minister for Health, my honourable friend Mr. Malone, has already started a round of talks with interested groups, including local authorities and the College of Occupational Therapists, as to how we can make some improvements speedily.
The noble Baroness, Lady Nicol, and my noble friends Lady Macleod and Lady Seccombe were right to focus our minds on the carers and their crucial contribution to community care. I can reassure them that they are at the very heart of our policy. The noble Baroness, Lady Nicol, asked also about the sale of property to fund nursing home and residential care, as did the noble Baroness, Lady Robson. Though local authorities must look at the value of a resident's property —in most cases it is their former home—they must ignore it if it is still occupied by the resident's partner, a relative who is 60 or over or who is incapacitated, or a child under the age of 16. Local authorities have discretion to ignore the value of the property in any other circumstances where someone is still living there and it would be reasonable for them to do so, for example, when a former carer continues to live there. A resident cannot be forced to sell their property without a court order. However, in most cases local authorities put a charge on the property so that when it is eventually sold they may recoup what they have paid in fees on behalf of the resident.
The noble Baroness, Lady Robson, asked about the opportunity that people have to refuse to be placed in a private nursing home. Patients can refuse to be placed in a nursing home or residential care home where there is a charge. In such cases social services and the health authority should try to find a satisfactory alternative, such as a range of services to support them at home. Patients never had a right to stay indefinitely in a hospital bed when doctors and others decide that they do not need continuing in-patient care.
My noble friend Lord Mottistone raised the issue of funding in the Isle of Wight. Since 1st April 1993 the total resources for social services on the Isle of Wight have increased by 12.5 per cent; from £14.3 million to £16.1 million. Since 1991 the increase in total social services resources on the island has been 90 per cent. Those are substantial sums which demonstrate the Government's commitment to community care and social services generally. Though I accept that the increase in the grant this year is not as large as the council had hoped, it is its responsibility to manage those increased resources carefully and effectively.
My noble friend Lord Ashbourne spoke of the difficulties faced by some of the Sue Ryder homes. Last summer I had discussions with the noble Baroness, Lady

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Ryder of Warsaw, and I am disappointed that the issues have not been resolved. I shall certainly write to my noble friend and to the noble Baroness.
This has been an important debate. The provision made for the care of the elderly, frail and disabled people in our society is of crucial significance to us all. The community care reforms, widely seen as the most ambitious legislation in social care since 1948, are beginning to take shape. After only 18 months there is clear evidence that things are beginning to change for the better. But there is still a long way to go. These changes were not meant to happen overnight: it is a programme for the next 10 years. But your Lordships can rest assured that this Government are committed to ensuring that the full benefits will be delivered and a seamless service given.
Lady Kinloss: My Lords, before the noble Baroness sits down, perhaps she can say whether or not she will look into the case for more consultants for younger people suffering from dementia.
Baroness Cumberlege: My Lords, I apologise to the noble Lady. I shall certainly do that. I shall also take up her point regarding the leaflets for long-term care. They are around and I shall ensure that the noble Lady receives copies.
5.54 p.m.
Baroness Jay of Paddington: My Lords, with the leave of the House, I thank the Minister on behalf of my noble friend Lord Ashley of Stoke for her detailed and careful reply. On his behalf also I thank all noble Lords for taking part in what has been an authoritative if somewhat disturbing debate. Knowing the deep concern of my noble friend in this regard, he may want to return to some of the issues raised this afternoon. In the meantime, I beg leave to withdraw the Motion.
Motion for Papers by leave, withdrawn.

Social Security: Spending Plans
5.55 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, with the leave of the House I should like to repeat a Statement made earlier today in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows:
"With permission, Madam Speaker, I should like to make a Statement on social security following from my right honourable friend's Budget Statement. Last year at this time I announced that social security spending would reach £88 billion next year and £92 billion the year after. Now I can announce that spending plans for those years have been reduced to £86½ billion next year and £90 billion the year after. This is the first time since records have been kept that social security spending plans have been scaled down. This reflects the impact, not just of lower unemployment and lower inflation, but also of my social security reforms. Nonetheless, social security
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on average now costs every working person £15 every working day. I am therefore announcing today further measures to curb the growth of expenditure and to help people off benefit.
"As my right honourable friend the Chancellor announced yesterday, we will implement in full the second stage of help with VAT as we promised last year. From April 1995, pensions will incorporate up to £52 for single pensioners and £73 for pensioner couples specifically to help with VAT on fuel. We will be letting people know about the extra help with VAT on fuel by means of a special notice in order books. We will increase help with cold weather payments and insulation grants beyond that previously planned. From this month payments for cold weather rise from £6 to £7 a week. They were to go up to £7.50 next November. But I shall in fact raise them to £8.50. We are also spending a further £45 million—£10 million more than I announced last year —to help insulate homes and improve fuel efficiency. It will provide grants for more than 60,000 extra households next year.
"A key aim of my fundamental review of social security is to improve work incentives. To help people out of dependency it is vital to do four things: to make work more rewarding than benefit; to help people with the transition from benefit to work; to persuade employers to hire the long-term unemployed; and to help create more jobs for the less skilled. I can announce a £600 million package, which addresses all four tasks.
"Family credit helps nearly 600,000 families in work. In October, I introduced a child care allowance which over time should help 150,000 parents with their child care costs. But the more people earn the less family credit they receive. Consequently, the incentive to move from part-time to full-time work is limited. So I am introducing a £10 a week supplement to family credit for those working 30 hours or more a week. And the least well off receiving housing benefit and council tax benefit will get the full value of the increase. This will cost £200 million and should help about 345,000 families. Family credit has proved its worth in helping families into work. But most unemployed people do not have children, so they are not entitled to family credit. But an in-work benefit might help them into jobs, too. I therefore propose to test run such a benefit through pilot schemes covering 20,000 claimants. If the pilots are successful we will consider introducing a national scheme.
"Many people who want to work are hesitant about accepting a job because of uncertainties about the size and timing of family credit payments, so I intend to speed up payments of family credit so that all new claims are dealt with in five days. Other people fear loss of help with their rent or council tax. So I shall let people who take a job after six months out of work keep housing benefit at their existing rate for four weeks, regardless of their earnings. And we will consult the local authority associations to ensure that entitlements to housing benefit and council tax benefit are revised speedily so that payments follow on seamlessly after the fourth week. The new back to

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work bonus, which I announced in October, will be of particular help for people who want full-time work. It will enable people working part-time on Jobseeker's Allowance or income support to accumulate a bonus of up to £1,000 payable on return to full-time work. This bonus will be tax-free.
"I am also giving employers an incentive to take on unemployed people. Any employer who takes on someone previously unemployed for two years will receive a one-year holiday from the employer's national insurance contribution. This change requires legislation so it will come in from April 1996. Assuming employers take on 120,000 people a year, they will benefit by £45 million.
"The greater the costs companies incur when they employ people, the less they can afford to pay or the fewer people they will take on. I particularly want to help less skilled people to get jobs. So I shall be reducing employers' national insurance contributions a further 0.6 per cent. for lower paid employees from next April; and I will raise all the earnings bands used to calculate employers' national insurance contributions by £5. To help companies concerned about high levels of sickness I can also announce that we will reimburse statutory sick pay in full where costs exceed 13 per cent. of a company's monthly national insurance bill.
"Housing benefit and income support for mortgage interest combined now amount to £11 billion. They have doubled since they were introduced in 1988. The UK is almost alone in paying 100 per cent of rents through benefit. As a result, tenants have no incentive to choose the less expensive of two dwellings nor to negotiate over the rent level. And landlords may be tempted to push up rents for those on benefit. Rent officers determine whether rents are within reasonable market levels and help is not normally available above that. But in many areas the market level is largely determined by those on housing benefit. The average private rent in the deregulated sector is around £75 per week. But housing benefit meets rents of over £350 per week. Taxpayers on modest incomes, meeting their own housing costs, resent subsidising rents higher than they can afford for themselves. And people on housing benefit should have similar incentives to those paying their own rents when deciding what they can afford.
"I shall introduce a new scheme next October. New claimants and those moving home will be entitled to housing benefit for the full rent up to the average rent for similar properties in the area. Housing benefit will only cover 50 per cent. of the portion of rent above that. Existing claimants in their current tenancy will continue to receive full housing benefit as at present. Local authorities will be given funds to be able to reimburse more than 50 per cent. of the rent above the average in cases where they think there is special need.
"Prospective tenants will want to know how much housing benefit is payable before they agree a tenancy. So we will consult the local authority associations and the Institute of Rent Officers about how to produce this information. At present people
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who are away can claim housing benefit for up to a year, even if their home is empty. In future, we will limit this period to 13 weeks except for people with exceptional reasons, such as those in hospital.
"Taxpayers pay the mortgage interest of people on income support. Since 1979, this expenditure has risen from £31 million to over £1 billion. And the scheme has major drawbacks. First, until I imposed a cap, it covered any size of mortgage, from cottages to castles. Next April I intend to reduce that cap to £100,000. Secondly, the generosity of the scheme for those out of work can create huge disincentives to move back into work. But to extend help with mortgages to people in work would be immensely costly. Thirdly, since income support cover is paid direct to lenders, the scheme is simply bailing them out from their bad lending practices. Lastly, the present system discourages individuals from taking out private insurance and stops lenders insuring all their loans. Nonetheless, private insurance has spread significantly. I believe that insurance of mortgages should become the norm. So for anyone taking out a loan after 1st October 1995 we will pay income support mortgage interest only after the first nine months. I believe that insurance for this nine month period will be readily available. Indeed, I expect that many lenders will incorporate it in their loans at very modest cost.
"Existing mortgage holders qualify at present for 50 per cent. of their interest payments for the first 16 weeks. But as this money is paid to borrowers, it is not always passed on. In practice, most people who lose their job and are unable to meet their mortgage payments return to work within a few months. And most private policies make no payments in respect of the first few weeks. As a result, lenders rarely repossess, even where the borrower is not covered by income support. I therefore propose that no payments will be made for existing mortgage holders, who start an income support claim, for the first two months. For the next four months, the payment of 50 per cent. of mortgage interest, currently made to the borrower, will be made direct to the lender. Thereafter, mortgage interest will be paid in full, as at present. We will consult the Social Security Advisory Committee, mortgage lenders and insurers about circumstances which cannot be covered by insurance. I am confident that the insurance market will respond, that lenders will behave responsibly, and that sound lending will ultimately contribute to a healthier market.
"The fight against benefit fraud remains a top priority. Last year our crackdown saved a record £654 million and caught a record 300,000 cheats. But prevention is better than detection. We want to stop fraud happening in the first place. That requires a secure system of payment. We are working with the Post Office to create an automated system of payment, probably involving a payment card, dramatically to reduce fraud involving pension books and girocheques. We are seeking private sector finance for this major initiative which will strengthen the whole Post Office network; although the system

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we choose must be easy and acceptable to use, especially for pensioners. Nine companies and consortia have put forward proposals to be prime contractors for a system which could be in use in 1996.
"However, most fraud involves people giving false information about their earnings and circumstances, so we will be making more checks on circumstances. We will be doing more home visits. And we are piloting a scheme in London so that local authorities can cross-check information about their housing benefit claimants. This will cost £100 million a year, but it should save over £2.5 billion over three years. I am also tightening some rules.
"I have already acted against avoidance of national insurance contributions by employers who pay earnings in various non-cash forms. It undermines the whole basis of the NI scheme. Such practices are devious. I have already put a stop to fine wine wage packets, precious stone salaries and a number of other ruses. I give due warning that I will take further action as and when required.
"Separately, I will be limiting the grant paid through the social fund for funeral payments. The level of payments for funerals through the social fund has grown by 6 per cent. a year above inflation. Costs have risen from £18 million in 1988–89 to £61 million this year—a more than three-fold increase. Funeral payments cover the whole cost, so funeral directors can force up cost to customers on social fund knowing they are unlikely to obtain better quotes. I have taken action to stop families claiming via remote relatives on income support. I propose next April to limit the maximum payment to £875, which is the average payment last year.
"Madam Speaker, the measures I have announced today mark a further radical step in my reforms of social security. My aim is: to improve incentives, to focus help on those most in need, and to stop social security outstripping the nation's ability to pay. I have set out a £600 million programme to help people out of dependency and into work. I have fulfilled our promise to help pensioners and others cope with VAT on fuel, at a far more generous level than anything suggested by the Opposition. And I have put forward sensible plans to tackle the rapid growth in housing benefit. Any party which shrinks from these problems is unworthy of government. This Government have the courage to tackle them. I commend these measures to the House."
My Lords, that concludes the Statement.
6.10 p.m.
Baroness Hollis of Heigham: My Lords, I thank the Minister for that Statement. We agree with much in it. Clearly, fraud must be tackled and clearly we must use benefits to encourage people into work rather than bar them from it.
I should like to make a general point before coming to the three more important issues that were raised in the Minister's Statement. I think that we all agree—we must —that the problems are very difficult, but in my
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view they are made much worse because the policies of the Department of Social Security, the Department of Employment and the Treasury do not reinforce each other but undermine each other. I shall expand on that.
The Government are seeking to contain DSS expenditure essentially by taking people off contributory non-means-tested benefits—even though they have paid for them—and putting them on to means-tested benefits. The Government are moving people off invalidity benefit and, if they are not eligible for incapacity benefit—and 200,000 people will not be—putting them on to income support.
The Government are also seeking to move people from unemployment benefit, which is a 12-month benefit, and on to the jobseeker's allowance which after six months will be means-tested. They call that "targeting", but it means that for every pound that the claimant might earn (or that his or her partner does earn), the couple loses a pound in benefit. I shall take the example of a couple where the husband is in work and the wife is working part-time. If the husband loses his job, his wife has to stop her part-time work, otherwise her husband will lose benefit. The result is that if one person loses a job, both do; if one person goes on benefit, both do. The family then goes from being work-rich to work-poor, doubling unemployment at a stroke. That is the direct result of means-testing and targeted policies.
Then, as we see in today's Statement, the Department of Employment and the Treasury come along with various fancy schemes, many of which are perfectly welcome in their own right, such as the rolled up bonuses or the 24-hour rules, to coax back into work the same people the DSS has just helped to exclude from work because of the means-tested benefit system that the Government have constructed. That is perverse and costly because once a couple is on benefit, they will need even more benefits to pay their 100 per cent. housing benefit bill, their council tax bill and the lot. That will end up costing more in total benefits than would have been the case if the couple had remained on contributory and non-means-tested benefits in the first place. We ask the Government to start thinking this through because at the moment their policy is not only stupid but undignified and very expensive.
I turn now to the specific proposals in the Statement. The first related to VAT on fuel. We firmly believe that VAT on fuel should not be increased to 17.5 per cent. especially, notwithstanding the Minister's words, as the compensation package is both inadequate and incomplete. The Minister said that he will implement in full the second stage of help with VAT, but that does not mean that that will cover the cost of imposing VAT on fuel.
I say that for three reasons. First, the people it is designed to help are precisely those with the greatest need of heating in their homes, such as the elderly. All the estimates show that the VAT rebate will meet only half the real cost of the imposition of VAT on fuel because those affected are heavy users of heating.
Secondly, those who do get compensation will not, as the Minister seemed to indicate, get a clear increase of 50p for a single pensioner and 70p for a couple; instead

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they will get what remains after the Rossi index has top-sliced their normal uprating—in other words, we estimate that the increase will be 25p for a single pensioner and 30p for a couple. I have to say that the Government's way of presenting the figures must be deliberately misleading pensioners.
Thirdly, those in equally dire financial need, such as the very low paid and, above all, those disabled people who have only the disability living allowance, will not get any compensation at all to cover the added cost of the imposition of VAT on fuel. Therefore, somebody with severe multiple sclerosis or severe rheumatoid arthritis who needs 24-hour heating will face increased heating bills of £2 or £3 a week with no compensation for the VAT. I ask the Minister to defend the Government's position and to say why disabled people receiving only disability living allowance will not have their VAT reimbursed, as will pensioners and other groups, while the chairman of British Gas is at the same time giving himself a pay rise of over £200,000 a year. That is deeply wrong and deeply offensive.
The second proposed change that was announced in the Statement relates to housing benefit. Again, we welcome aspects of it. We welcome the smooth-over of the four-week period. That is right. We welcome the fact that the Minister is proposing that tenants should know their housing benefits in advance. That is right. It is understandable that the Government want to cap housing benefit. But let us be in no doubt about it: like so many other problems, this is a problem of the Government's own making. The Government decontrolled private sector rents in 1988, deciding, as Sir George Young said, to let housing benefit take the strain. That has cost us as taxpayers an additional £7 billion in rent allowances since. However, the Government are now saying that housing benefit will not take the strain and that they will not allow it to finance reasonable market rents but only the average rent in the locality plus 50 per cent. of the difference. That is rent control through the back-door.
The Minister talks glossily about tenants' incentives to choose "cheaper property". What world is he living in? Tenants are in no position to choose; it is a landlord's market. I know that tenants are grateful simply to find somewhere clean, decent and safe. What will now happen? Does the Minister really assume that landlords will reduce their rents to the rent officer's judgment of the average rent in the locality? Already most landlords prefer not to let to tenants on housing benefit. If they have to cut their rent as well, they certainly will not let to such tenants.
What happens then? Tenants on housing benefit will either be unable to take the property and will become homeless; or they will seek to top up their rent out of income support, go into debt and then become homeless; or the local authorities will be expected to pay the 50 per cent. difference, especially if children are involved who might otherwise be taken into care. That will mean either a charge on council tax payers (local authorities may be capped) or on council tenants (who themselves will have to pay higher rents to gain the higher rent allowances and who will therefore need more housing benefit themselves).
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Will the Minister please tell us how much the proposals will save and who or what he now expects to take the strain, if not housing benefit? Will it be the landlord, by cutting the rent? Unlikely. Will it be the tenants who will see their income support top-sliced? Unaffordable. Will it be the local authorities, which are capped? Impossible.
The Government are also introducing new proposals on mortgage insurance about which we are very worried because they are likely to increase homelessness. There are real difficulties here. The Council of Mortgage Lenders says that 57 per cent. of home owners receiving income support help with their mortgage are not in work. They are disabled, single parents or retired. They cannot get insurance. Those who most need insurance will, by definition, be those least able to get it and least able to afford it. Will the Minister please tell us who will take the strain? If private tenants are not going to be able to have access to housing for rent, if council houses are not being built by local authorities and if people are unable to afford to keep up their mortgages, who will meet, face and take the strain of the resulting problem of homelessness which the Government are surely creating?
Finally, the Government have a series of proposals in the Statement on employment and moves back into work. The Government are quite right. The social security system, as at present constructed, produces a double problem. There is the employment trap, that is, getting from benefit into work. And, once in work, there is the poverty trap; that is, of increasing your earnings, once in it.
Clearly, we welcome some of the detailed proposals—the national insurance holiday for the long-term unemployed, which was a Labour Party idea in the first place, the rolled-up bonus, and the work trial schemes. They are intelligent. We also welcome the pilot schemes of work-start. The trouble is that we have little confidence in the Government's ability to deliver. To take Restart, for example, out of 850,000 people who last year were interviewed and counselled only 1.5 per cent. went on to find jobs. Why? The problem is not lack of skills, although that does matter. It is certainly not motivation. It is the absolute lack of jobs in the economy for male manual workers needing full-time work. We have seen our manufacturing industry in dereliction; we have closed down our construction industry; we have capped local authorities, who can no longer provide the infrastructure and public service jobs which such men previously did. It is not surprising.
The Government propose increases in family credit premium for those in work, and that is welcome. They are also considering extending family credit to people without families; that is, single people and couples without children. Can I raise some worries on that? I believe the intentions of the Government are benevolent; I am sure they are. However, the prospects are worrying. What the Government are saying is not that employers should pay a minimum living wage but instead that the rest of us, as taxpayers, should top up a wage below the living wage to make it so. Such a scheme could cost £490 million a year. A similar scheme in the 1790s was called Speenhamland. It is quite perverse. On the one

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hand, the Government are placing burdens on employers such as statutory sick pay, maternity pay and possibly pay for industrial injuries, which should be a national insurance and government responsibility. On the other hand, what should be the responsibility of employers—adequate wage levels—has been taken over by the Government, who will top up wages from your taxes and mine. Far from employees, it will be employers who will be sponging off a dependency culture.
Family credit is sensible if attached to a minimum wage: then it tops up family costs. Instead it is going to be used to top up wages themselves. The implications for public expenditure and the blank cheque it implies for wage levels and for the Treasury are frankly mind boggling. Employers will be able to press wages down even below income support levels, knowing that family credit and tax payers—you and us—will take the strain. I am amazed the Treasury will wear it.
We do not under-estimate the difficulties the Minister faces, but I have to say that they are largely of the Government's own making. The Government decontrolled private rents, and there has been a crisis in housing benefit. The Government have increased means-testing and there is therefore a crisis in employment and poverty traps. The Government have scrapped wages councils and therefore a minimum wage, so we are going to have a crisis over family credit. As for VAT on fuel, I do not believe the Government will be forgiven. In too many fields in this Statement the Government's policies are perverse, uncivilised and costly; they simply will not do.
Earl Russell: My Lords, admirers of the late Sir Alan Herbert will realise that when I refer to the Bishop of Ipswich I am describing an entirely fictional character. I am tempted to greet this Statement with the favourite remark of that character, "Well, it could have been worse". I am pleased to welcome the back-to-work incentives. They embody what is rapidly becoming a three-party consensus. We might argue about which party had these ideas in the first place. I do not think we need bother. What matters is that somebody is thinking and taking action which, on the whole, goes in the right direction. That we cannot but welcome.
I welcome the concession on the employer's national insurance below £205. I welcome the incentive to take on the long-term unemployed although this will clearly need monitoring to make sure that employers do not dismiss people who are not long-term unemployed in order to take on those who are. I am glad to see the Minister nod. I look forward to his further explanation. I welcome the rebate for taking on two-year unemployed. But why is this to come in during 1996 when presumably the Government are hoping that unemployment will be a good deal lower than it is now? It reminds me a little of the schoolboy who was asked which was the more important, the sun or the moon. He said that clearly the moon was more important for the moon gives light when we need it at night and the sun gives light in the day when we do not need it.
I agree with the noble Baroness, Lady Hollis, that some measures the Government are taking may rob others of their effect. I was extremely interested to hear
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what she said. A fact sheet from the Rowntree Trust, which I suspect the noble Baroness also received, said that the most rapid increase in unemployment was among the spouses of the unemployed. The noble Baroness is the first to offer an explanation of that phenomenon, I believe that she has made an academic as well as a political contribution.
I welcome warmly the attempts to ensure more rapid assessment of housing benefit and family credit, the four-week tiding-over period and the attempt to ensure quicker assessment of family credit. However, these proposals will put burdens on staff in benefit offices. The biggest saving thrust of the Statement concerns staffing within the government machine. Last September we had worrying reports of staff shortages in benefit offices. There were reports last week of staff shortages in employment offices in London. I should like to be sure that staff in benefit offices, who are doing their best, are not going to be blamed for failing to do what they have not enough people to deliver. The situation will need watching.
The job finder's grant I welcome, as I did last year. It is an imaginative and practical idea. So far, I believe that there has been a pilot study only. I would be grateful for clarification. Is it now actually being made universally available or is it merely a rather bigger pilot scheme? I have not managed to understand what exactly the Statement is saying about that.
The back-to-work bonus I welcome, and also the fact that it is tax free. I wonder, however, if that is quite enough. It will inevitably be perceived, since this is money that people have earned while on income support, as the Government paying people their own money. The Government will, I think, be asked whether they intend to pay that money with interest or, if not, at the very least, in the phrase of the student loans Act,
"at a zero real rate of interest."
That is a point about which the Government might think.
I welcome, subject to the same reservation as put by the noble Baroness, the in-work family credit for the childless, and the full-time supplement. I will not make my party conference speech about that now. But the point needs thinking about. My main reservation on this section of the Statement is that over and over again we read the word "pilot". In fact, it looks like an airfield after rather a bad raid; it is all pilots and no planes. I would like to think that some planes will be supplied in the fairly near future so that some of these pilots can take off.
It is just not incentives in the benefits system that we need if we are to get people back to work; we need training. I regret totally the cuts in the budgets of the TECs, which are likely to work against the thrust of the welcome concessions contained in the Statement. In that context, and in the hope of saving the cost of severe hardship payments, I should like to ask whether there has been any uprating in the youth training allowance and the youth training bridging allowance, because, if not, the Department of Employment is, as usual, passing its bills over to the DSS. That is a form of recycling which I hope the department will agree is deplorable.

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There are a number of things that the Chancellor and the Secretary of State could have done in the way of making it easier to get back to work, which have not been done. There is no relaxing of the housing benefit tapers; there is no concession to the pressure for a disregard or taper on income support. This summer, at the Liberal summer school, our outside guest was Peter Morgan of the Institute of Directors. He argued at some length that the benefits system discourages enterprise. Your Lordships may imagine that I questioned him closely about what he meant. What he was concerned about was that the total lack of disregard discourages the unemployed from doing small, self-employed jobs such as, for example, window cleaning. I do not agree with his remedies, but he has pinpointed a very real problem. I hope that the Minister will think about it.
Nothing has been done about passported benefits which are one of the big disincentives to getting back to work. Nothing as been done about the costs of travel to work. That can easily be £6 and £7 a week. It forms a tidy hole at income support levels. There is no recognition of the numerous people who cannot go to work unless they have a car. I do not see how someone in that position who does not have a car can ever get back to work. I should like to think that some thought was being given to the problem.
If people are to get back to work, as well as changes in the benefit system they need housing. They need a supply of low-cost housing. Here again, one is tempted to think that the Government have literally got themselves into a situation where their left hand does not let their right hand know what it is doing—the left hand being the Chancellor and the right hand, of course, the Chief Secretary.
The cut in the grant to the Housing Corporation, and the cut in the local authority grant for managing and maintenance will not do anything to encourage low-cost housing. Nor, I think, will the changes in housing benefit. One of them, I welcome. It is one for which I have asked in the past, and therefore I must. That is the arrangement to allow the tenant to be notified of an eligible housing benefit before a tenancy is struck. I wrote to Sir George Young asking for that on 21st December last. I should like, rather belatedly, to give thanks that that has been noticed. On the other hand, I am not happy about the notion of subsidising the average rent only. Every cricketer among us knows that some scores are above average. Not every house on the market can have an average or below average rent. That is in the nature of an average. So some people always must be forced into paying rents above average, with the consequences the noble Baroness outlined.
I ask the Government for one technical concession which it might not be beyond their power to grant. It is that the word "average" should be interpreted as the average rent of houses which are fit for habitation because, as we know, there are a great many which are not. They pull down the average considerably. If we push people into living in those houses, it is the Department of Health which will pick up the bill, and that will not be good for the PSBR.
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I am interested in the proviso about people not receiving housing benefit if they are away from home for more than 13 weeks. I well understand the thinking behind the proviso. The example given in the Statement is that of prisoners. Again, I see the thinking behind the Statement. But the biggest difficulty in the reintegration of ex-prisoners in society is obtaining employment, and not having a home to which to return generally is not a help to obtaining employment. So I wonder whether here the Government may be cutting off their nose to spite their face. Other exceptions which I hope will be considered include seamen and members of the Armed Forces. I hope that there will be consultation about the matter because there is a good deal of thinking to be done.
My greatest misgiving relates to what is being done about mortgage interest. The cap is being reduced to £100,000. I hope that we can be told that that figure will exempt London. If it does not, it will be of little use. We are also told that the first nine months will not be covered. A lot can happen in nine months, including the building up of a very high level of debt. Once again I express my regret that the Government do not keep any figures about the levels of debt among those on benefit. A great many proposals might come out differently if that information were available to them.
The Government suggest that people should use private insurance. I am all in favour of people doing that when they and the insurance market can afford it, but at the moment our insurance market is under some strain. I should not have thought that it was in the national interest to persuade insurers to take on a great many heavy extra risks. I have looked into such insurance myself at various times when the university budget was under some strain. I found that on an academic salary the cost appeared prohibitive. If it is prohibitive on an academic salary, it will be prohibitive to a great many of those with whom we are concerned. They have the choice then of putting a greater strain on housing benefit or of becoming homeless and not working. I do not believe that either of those results are quite what the Government want. We shall have more repossessions. That will depress the housing market. It will diminish the feel-good factor, and that perhaps as much as anything else will lose the Government votes. It will not worry me. It will not worry the noble Baroness. I wonder whether it even worries the Government.
I agree with everything the noble Baroness said about that. It creates yet another poverty trap, and in a future Statement we shall be hearing of measures to relieve that. It makes me say yet once again how serious it is that students have been excluded from the benefits system and therefore excluded from help they need desperately.
Finally, and appropriately, I come to funerals. First, I want to ask the Minister whether the capital limit on the cost of funerals will be uprated every year. If not, it may cause severe hardship within a few years. Secondly, I want to ask the Minister whether he really supposes that the newly bereaved, talking to a funeral director, are, in any classic sense, customers in a free market. Most of us at that moment in our lives just do not regard it as

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decent to haggle and bargain over the price we are paying. So, for that reason, that proposal is not decent. I hope that the Government will withdraw it.
Lord Mackay of Ardbrecknish: My Lords, in so far as some parts of the Statement were welcomed by the noble Baroness and the noble Earl I thank them. They asked me a barrage of questions and I shall do my best to answer them. It is all very well for the noble Baroness to say at the beginning of her remarks that the problems are difficult. Indeed, they are. If in addition to following her questions I had time to click away at my pocket calculator I expect that I should have found that, if one interprets her questions and criticisms as meaning that she would prefer to spend more money in some of these areas, I had clicked the £88 billion towards £90 billion or £100 billion—and all at the expense of the taxpayers. That problem faces any government when they discuss the benefits system.
The noble Baroness began by attacking means-tested benefits in general. I shall read her remarks with interest because the cost of moving to non-means-tested benefits would be considerable and I should probably have to buy a new battery for my calculator.
She rightly agreed with the noble Earl and me about the problem of unemployment and of finding ways of encouraging people back into work and off benefit. She painted a particular scenario about the husband losing his job and the wife giving up work too. In fact, an easement in the jobseeker's allowance will allow a partner to work up to 24 hours per week instead of the present 16 hours and to keep the benefit. We have taken that problem into account.
The noble Baroness and the noble Earl were not pleased with my announcement about the help that will be given to pensioners and others as regards VAT on fuel. Yet on 21st November 1993 her honourable friend Mr. Donald Dewar, who leads for her party in the other place, indicated that the Government must add something to the pension in order to take account of that increase and that they could do so by adding an extra 50p. We added an extra 50p and we are now adding another 50p. The noble Baroness may like to argue about how we arrived at the second 50p, but the simple fact is that there will be £1 more on the pension of a single person and £1.40 on that of a married couple. That would not be available were we not proceeding to help people to meet the extra cost of VAT on fuel. We shall be giving approximately £1.25 billion-worth of help as regards this problem.
The noble Baroness asked whether the receivers of AA and DLA will be compensated. They will, as they were last year, because 90 per cent. of them receive benefits which include compensation. The remainder are likely to be in work or to be better off.
The noble Baroness spoke of housing benefit, as did the noble Earl, and she painted a dismal picture of what she thought would happen. She suggested that the Government's housing policies were to blame because the deregulation in 1988 had caused the escalation. Of course rents have risen, and housing benefit has risen as a result, but we must try to temper that rise. When
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average levels are much closer to £75 per week, taxpayers should not be expected to subsidise those receiving housing benefits on rents such as £350 per week. I read in today's newspaper of such a person paying more than £700 per week. If people choose to live in better quality, more expensive housing they cannot expect the taxpayers, many of whom do not live in such high quality housing, to pick up the Bill.
Of course, to some extent deregulation has caused that problem. However, it has increased the amount of housing for rent by approximately 16 per cent. I believe that reintroducing rent controls would be a retrograde step. The actions that we are now taking will go a long way towards helping those who are living in expensive accommodation. It will not affect people who are living in accommodation that costs up to the average level. Above the average level we shall pay 50 per cent. of the difference. I indicated in the Statement that local authorities will be given money in order to deal with hard cases.
I turn now to our proposals on mortgages. There is a great deal of indication that already a thriving protection insurance market exists and will develop in order to meet the demand that we believe will be placed upon it by the taxpayer withdrawing from the first nine months. Mr. Mark Boleat, the Director General of the ABI, said today that insurance companies will meet the increased demand from new borrowers for this type of insurance, with companies already providing this cover expanding their capacity and possibly new companies entering the market. I understand that today the Abbey National Building Society reported that between 40 and 50 per cent. of new borrowers are taking out a similar type of insurance.
We shall proceed cautiously on that issue and shall consult widely on the package through the Social Security Advisory Committee and directly with the lenders and insurers. I can assure the House that pensioners will be protected. The position of other vulnerable groups will also be considered during the course of the consultation.
The noble Baroness turned to the issue of encouraging people back into work and, understandably, asked whether there was a danger with the NIC holiday that some employers will sack people at the end of the holiday and recruit new people who will also be eligible for the holiday. It will come as no surprise to your Lordships to know that one of the problems in the whole social security field is that when one tries to do good, as we believe we are doing here, a number of identifiable problems crop up. We fully accept that that could be a problem. The detailed monitoring arrangements have yet to be considered but we believe that reputable employers will not do that. If we are right about the need to give such people, most of whom are men, the opportunity to return to full-time work, we hope that, if after a year they prove to be excellent employees, only a foolish employer would go back to the beginning and recruit another employee in order to receive the holiday. Obviously that is a matter that we shall be watching.
The noble Earl asked a number of questions and I suspect that I have covered some of them already. He asked about the staffing of benefits offices. In order to

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speed up the payment of family credit, which we believe is important and is paid from the central unit at North Fylde, extra resources are being provided.
The noble Earl also asked why the holiday will not start until 1996. As I made clear in the Statement, the reason is that we require legislation. He asked whether the back-to-work bonus will incorporate interest accumulated during its accumulation. No, it will not attract interest during that period but it will be tax free when it is paid out, which is important.
The noble Earl made much of a surfeit of pilot schemes. Some of the schemes that I announced today are not pilots. The new premium of £10, the faster payment of family credit and the run-on in four weeks on housing and council tax benefit are not pilot schemes but are being introduced now. The last two schemes are a recognition of the problem that he raised; that is, the expense incurred when people move off benefit and into work. We are aware of that and we hope that those two measures will try to tackle the problem.
On income support hardship payments available to 16 and 17 year-olds and to those waiting for YT or who are unable to work or train, I can tell the noble Earl that they have been uprated in the Statement. I believe that the £815 million spent on YT in Great Britain in 1994–95 represents a considerable investment in our future.
I am pretty certain that I will not have managed to answer every question that I have been asked. However, I believe that what we have here is a package which faces responsibly the problem of looking after those people who need help from the taxpayer and, at the same time, ensures that the cost to the taxpayer does not run out of all proportion to the ability of the taxpayer and the economy to pay.
6.51 p.m.
Lord Boyd-Carpenter: My Lords, I should like, first, to thank my noble friend the Minister not only for reading the Statement but also for the extremely interesting answers that he gave to a very large number of highly complex questions. I know that my noble friend would not for a moment claim that he had dealt with all the points raised. Therefore, the first question that I should like to ask him is whether the Government are proposing to arrange for a full day's debate in your Lordships' House on the Statement and on the proposals therein contained? It is a matter which is of importance to the vast majority of our fellow citizens. It is also a matter upon which your Lordships' House boasts considerable expertise, with a good many people who have served in social security departments who may claim, perhaps, to know a little bit about the subject.
It is most important that we should have an early debate, and a full day's debate—I do not mean one of those short debates—on the matter. I know that my noble friend will not be able to answer me at this time, but I hope that he will convey to his noble friend the Leader of the House the fact that we feel it very necessary indeed that this House should bring its great knowledge and expertise to bear on a subject which, as I said, is of such great importance to so many of our fellow citizens.
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In the meantime, I should like to ask my noble friend a further two questions. First, I turn to what is being done to counter the evil effects of the proposed substantial increase in VAT on domestic fuel. I must confess that I share the view that has been expressed from the Benches opposite; namely, that the whole proposal is a great mistake and that the Government would be much wiser not to proceed to increase VAT on domestic fuel. However, on the basis that the Government are going to do so regardless of the advice they receive, can my noble friend say—I could not quite follow the figures that he gave—whether the proposed compensation offered will in the average case (and obviously cases will vary) fully compensate an unemployed person for the increase in the cost of his fuel, especially if the weather turns out to be cold? It is important for us to gain some idea as to whether the compensation, which in principle is obviously rightly being offered, will really make a substantial difference and seriously reduce, if not eliminate, the hardship which otherwise will undoubtedly be caused by such a very severe increase in taxation on what is a domestic necessity.
Secondly, my noble friend made no reference to the item in the gracious Speech that the Government are proposing to introduce a measure to secure the equalisation of pension ages for the retirement pension. That was not included in the Statement. It will obviously require legislation, but I should like to know whether such legislation is imminent.
Lord Mackay of Ardbrecknish: My Lords, I thank my noble friend for his kind opening remarks. I believe that I am right in saying that he is, perhaps, the longest serving incumbent of the Department of Social Security—although it may not quite have been called that—of anyone around today. I accept that there is a fair amount of knowledge to hand, as there are a number of other people in your Lordships' House who have passed through the Department of Social Security at various times. On the question of a debate, I believe that I would get into deep trouble with the usual channels if I made any comment in that respect, other than to say that I shall, of course, pass on my noble friend's remarks.
As regards VAT and the compensation for cold weather, I must tell my noble friend that clearly it would be impossible to identify and compensate exactly for each individual fuel bill. Therefore, we have to do it the way that we have and take a fairly broad brush approach by putting those extra amounts of money onto certain groups; for example—and I am using the pensioner as the basic starting point—£1 per week for a single pensioner and £1.40 per week for a couple.
I turn now to the problem of cold weather. It is possible that my noble friend did not notice that I mentioned that the cold weather payments, which rose this month from £6 to £7 a week, will in fact rise to £8.50 in 1995. That is £1 more than was originally announced. Perhaps I may also point out that the extra £10 million that I announced for use in insulating houses is a very important way in which people can not only reduce their heating bills but also make their houses a

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great deal more comfortable to live in. I very much hope that people will take up the offer of the money which is available.
I can confirm that there was nothing in the Statement about the equalisation of pension ages. Perhaps if the matter comes to the House in about the year 2010 it may begin to appear in the uprating statements. However, I can tell my noble friend that a Bill will shortly appear on the subject. I have no doubt that we will spend many happy hours discussing it.
Lord Jenkin of Roding: My Lords, I have one very short question to ask. My noble friend referred to a change in statutory sick pay. Do I understand from what he said that the Government have accepted the alternative scheme that was written into the statutory sick pay legislation, which was to be subject to consultation and to a final decision?
Lord Mackay of Ardbrecknish: My Lords, I am happy to confirm to my noble friend Lord Jenkin of Roding that that is indeed the case. Employers will compare their statutory sick pay payments in a tax month with their national insurance contribution liability for the same month. Where the SSP paid exceeds 13 per cent. of their NIC liability, the SSP paid in excess of the percentage threshold will be eligible for reimbursement. I understand that that point was argued by my noble friend when the legislation went through the House. The department consulted widely and I am happy to say that the new scheme has been given a wide welcome by both business and the TUC.
Lord Dean of Harptree: My Lords, can my noble friend the Minister confirm, first, that the Statement fully honours the Government's commitment to restore the real value of pensions and benefit on an annual basis? Secondly, I do not believe that my noble friend mentioned war pensions. Can he confirm that there will be similar increases in war pensions at the same time?
Lord Mackay of Ardbrecknish: My Lords, I can confirm that the uprating part of today's Statement honours the Government's obligation. Uprating is based on the RPI in the month of September. We have fully honoured that commitment. War pensions will, in fact, join the other pensions to which my noble friend referred.

Pension Transfer Schemes
7 p.m.
Lord Haskel Lord Haskel rose to call attention to the consequences for members of occupational and other pension schemes transferring their pensions to private insurance companies and the need for remedies and satisfactory consumer protection in the future; and to move for Papers.
The noble Lord said: My Lords, on 15th June this year my noble friend Lord Jay and other colleagues drew to your Lordships' attention the problems of a large number of pensioners, present and future, caused by the Government's drive towards personal pensions.
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Since that debate we have had the Government's proposals to rectify this damage. I should like to examine these proposals and show that unless regulation is much stronger a lot of the damage will not be rectified and further difficulties will arise resulting in yet more calls on the benefits system.
I wish briefly to remind your Lordships how all this came about. In 1986 the Government decided to encourage people to move from state earnings related pensions, known as SERPS, and occupational pension schemes, to personal pension schemes. The reason given was portability of pensions. The real reason was to move pensions from the public sector to the private sector. Some £14 billion was spent on this exercise. Some £4 billion was spent to fund a 2 per cent. bonus to persuade people to opt out of SERPS. Some £10 billion was spent on National Insurance rebates. A further £1.2 million was spent by the Government on a TV and press advertising campaign to persuade people to move into private personal pensions.
Some of your Lordships may remember the frenzied activity that went on at that time; the advertisements shouting that this was the only time the Government would give you money, and urging people to liberate themselves from the public sector. Of course, the voice of reason was drowned out by the hard sell of the pensions industry, ably abetted by the Government. The Consumers' Association, the National Association of Pension Funds, the CBI and even one or two of the large pension companies all warned of the dangers of people ending up with inadequate income by contributing to a personal pension plan rather than by contributing to a defined benefit scheme.
In the early 90s the warnings began to come true and people started to find that their pensions were in fact inadequate. Some made a fuss and because of this the regulators—one wonders what they were doing all this time—started to investigate and unearthed a whole culture where the mis-selling of pensions, deliberate or negligent, had been allowed to flourish. It is estimated that some 5 million private pensions had been sold during that time, and each one would have to be investigated and where there had been mis-selling the customer would have to be compensated.
The Securities and Investment Board, SIB, decided to split up the 5 million customers into priority groups. The first priority group, consisting of 1.7 million people, are those who are approaching retirement. They will have their personal pensions looked at during the next two years. The steps to be followed have been laid down in great detail. First, the pension provider examines each personal pension plan to see if there has been any loss because of the changeover. If there has been a loss, then the pension provider examines the records to see if there has been any mis-selling. The customer is sent a form to complete to help the pension provider with this work. If there has been any mis-selling, the pension provider calculates the compensation based on certain actuarial assumptions and makes an offer to the customer. If the customer is not satisfied, there is an appeals procedure eventually going to the Pensions Ombudsman.
I am sure that by now your Lordships will be wondering how the customer is going to cope, but do not worry, the SIB has produced a 12-page booklet for the consumer with helpful advice, such as that on page 7 which states that if someone receives an offer of redress, he should read it carefully. It further states,
"you will have to decide whether you agree or disagree with the assumptions",
contained in this offer.
But never mind, there is a telephone help line. The Pensions Hotline is an 0171 number, which means that the caller has to pay, and it is open from 9 a.m. to 5 p.m. Monday to Friday only. Noble Lords may like to compare this with the Cones Hotline to complain about roadworks. This is an 0800 number, which means that it is free to the caller, and it is manned 24 hours a day seven days a week. Obviously roadworks are more important than pensions. A friend of mine telephoned the hotline and was advised to contact the regulator. The regulator said that he was not allowed to comment on compensation and advised my friend to go to an independent financial adviser—perhaps the one who got my friend into the mess in the first place! If the consumer wants true, independent advice from a solicitor or accountant, he will have to pay. Perhaps the Minister will tell us if he is satisfied with this consumer protection.
Sorting all this out is a huge task. Let me remind your Lordships that there are 1.7 million priority cases. There are also lots of hazards in the way. There are missing records; firms which have gone out of business or which are deliberately dragging their feet; and potential disputes between the pension providers and their intermediaries. And there is more to come. The first investigation does not cover SERPS. This is to come in 1995. There also seems to be some trouble looming about the mis-selling of endowment policies, mortgages and investment advice. Nobody knows how many cases will merit compensation in the end, but, in anticipation, the Ombudsman is appointing two assistants and increasing the staff. Who will pay? Most firms and independent financial advisers have professional indemnity insurance, but this usually only covers part of the cost. The rest of the money will have to come from the pension providers or from a levy. At the end, this enormous cost will come from our insurance premiums.
So what lessons should we learn from this sorry mess? First and foremost somebody must look after the consumers' interests and see it through. Can this be the regulator? Not as at present organised. The Personal Investment Authority, or PIA, was set up in June by SIB to raise standards and tighten up on regulation. But it is a kind of hybrid institution. On the one hand it is supervised by SIB, which is in turn responsible to the Treasury. But on the other hand the PIA has to bid for members of the pension industry to join it because without their funding the PIA cannot exist. So it is not pure self-regulation, and neither is it independent regulation. The public must have confidence that the regulator is impartial and detached.
This conflict between the demands of the pensions industry and the demands of public interest will be impossible to resolve. I believe that the self-regulation
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that we had in the 1980s has had its day, and that eventually we must have a system of direct regulation. Meanwhile, I urge the Government to strengthen SIB yet further while an orderly changeover takes place. The regulators will be very unwilling to damage their own paymasters, and so will have every incentive to keep the compensation low.
A second lesson to be learnt from this is how foolish the Government were to rush in and create a false market in personal pension plans. Indeed, because of their advertising and the financial inducements offered, one could fairly say that the original mis-selling was by the Government themselves, but the financial cost of putting this right will eventually fall on all policyholders. Not only were the Government warned of the problems: the data on which they acted were wrong. Their data assumed that all of us would work continuously until aged 60 or 65. This is now manifestly untrue. With the benefit of hindsight we can see that the collective provision of pensions plus the encouragement of personal savings is a far cheaper way than buying annuities out of personal pension plans. Only an independent financial adviser and somebody with a dislike of the public sector, could think otherwise. I hope that the Government have learnt their lesson and, in rectifying the situation, will look at alternatives, such as universal private pension provisions to run alongside the state scheme, or the national pension savings scheme suggested by the Social Justice Commission.
A third lesson to be learnt is that we must keep standards high. During this past year there has been a great deal of euphoria about the joys of deregulation and self-regulation. That has not been shared by pensioners because the private sector is also capable of low standards. It has allowed people to buy private pensions but contribute no more than the contracting out payment. After deduction of commission and charges, virtually no pension is provided. In exactly the same way as some bad employers use the benefits system to supplement low wages, so a low level of pension will have to be supplemented by social security.
It is in the interests of all of us to see that standards are raised, and part of the regulator's duty must be to see that people's pensions are properly funded. Low standards of pension funding now only means a call on the benefits system later.
Looking to the future, I welcome the important step that next year we shall have much more openness about commissions and expenses. That will help the consumer to make more informed decisions. Had that information been available during the 1980s as many of us on these Benches requested, many mis-sold private pensions might well have been avoided.
There are other problems to be dealt with. Both occupational and personal pension schemes have serious drawbacks. The treatment of early leavers in occupational pension schemes and the high administrative costs of personal pension schemes are but two examples. However, the more flexible arrangements regarding the purchase of annuities for those with personal pensions announced yesterday by the Chancellor are a step in the right direction.
The basic state pension does not provide adequate income, and more than 1.5 million pensioners are entitled to income support. One in four do not claim it. The basic state pension is only 15 per cent. of average male earnings. On current calculations, it could be worth just 6 per cent. of average earnings in 40 years' time. That is what makes pensioners the new poor.
I hope that we shall hear from the Minister that the pensions Bill proposed in the gracious Speech will tackle those problems and give your Lordships a further opportunity to debate this important and urgent problem. It is urgent, because, if pensions are not properly funded, a smaller workforce will be paying for a larger retired population. That makes pensions an urgent and major area of welfare reform. If, as a result of this scandal, adequate pension arrangements are made and direct regulation ensures that the quality of advice to consumers is good, then something will have come out of this. I beg to move for Papers.
7.13 p.m.
Lord Jenkin of Roding: My Lords, I have pondered carefully as to whether it would be appropriate for me to take part in the debate. I have to declare an interest immediately. I am chairman of a major mutual insurance company which has sold a large number of pensions. Whether it deserves the obloquies which have been thrown at the industry by the noble Lord remains to be seen. Happily, I believe that the company that I chair has always had extremely high standards.
I have no doubt that we shall discover some cases in which compensation will have to be paid. However, I believe that I shall be able to convince your Lordships that in his speech the noble Lord, Lord Haskel, has fallen into the trap of a great many other commentators who have chosen to jump on the bandwagon of bashing the life insurance industry, of extracting partial information from reports which were leaked before they were completed and of drawing conclusions which will turn out to bear no resemblance to the facts.
Perhaps I may develop my argument and justify my contentions. I agree with the noble Lord in some of what he said. It is very important that, as he put it, we keep standards high. I would have hoped that he would have recognised that standards in the selling of insurance products, including pensions, have increased dramatically in the past five years. I have no hesitation whatever in saying that the system of regulation and monitoring of companies which now exists has played a large part in that. We welcome it. I am not sure that the system is right yet, and if I have time before the clock catches up with me I may be able to offer some possible suggestions.
I also agree with the noble Lord about the disclosure of commission. About four years ago I minuted my chief executive indicating that I thought that the office should be prepared for a system of full commission disclosure. Most of the industry did not accept that and it was resisted. It is now coming, and all the preparations are being made.
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Perhaps the most hopeful sign for the future is that the chairman of the SIB, Andrew Large, is firmly of the view that if we have full commission disclosure it may be possible to dispense with much of the enormously bureaucratic and costly regulation which the industry currently undergoes. When he told me that I said "I will believe that when I see it". However, I hope that the noble Lord, Lord Haskel, is right and that that will make a considerable difference.
The last speech that I made as Secretary of State for Social Services, in July 1981, grappled with the problem of the dismal treatment of early leavers from occupational pension schemes. I warned the pensions and life insurance industry then that unless it dealt with that problem the Government would be forced not only to provide a compulsory measure of protection but to introduce personal pensions. Very little was done about the plight of the early leavers—those who changed jobs regularly during their careers. They end up with substantially reduced pensions. Of course, it is in the interests of a pension scheme to make sure that there are as many people as possible with frozen benefits because that means more for everybody else, and bully for the pension fund manager.
The noble Lord, Lord Haskel, described what happened in 1988. That was six years ago and a great deal has changed since then. The Government recognised that one of the ways to protect early leavers was to allow people to buy money purchase personal pensions rather than surrendering the interest in final salary schemes. That change coincided with the implementation of the Financial Services Act.
The changes in the regulation of the pensions market were at that time regarded favourably. As a result of the advertising which the Government undertook, there was considerable interest among the public in the new portable products. All life offices provided those products, and many independent intermediaries and tied sales forces made a particular sales effort.
Because at that stage regulation under the Financial Services Act was still in its infancy, many of those early sales, it is now widely recognised, were made on the basis of inadequate fact finding. Moreover, it should have been clear—and to some it certainly was clear—that it was unlikely to be good advice for an individual to opt out of a good quality occupational pension scheme and simply leave their pension behind. Schemes such as the teachers' scheme and the National Health Service scheme have been instanced.
However, to have transferred into a personal pension scheme may well have been appropriate. After all, in the economic climate of 1988–89 to ask a person whether he or she was likely to stay in the same job for the whole of his or her career was to invite the answer, "Of course not". The economy was in a state of growth and development. People were moving. There was enormous change. Very few people imagined that they would stay in the same job. In those circumstances, to transfer out of an occupational pension scheme and pay the money into a personal pension plan, in some cases with employers continuing to make contributions to that plan, could very well have been very good advice indeed. At the same time, when people saw the appalling results of

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the Maxwell débâcle, and when it appeared that perhaps the security of occupational pension funds was not so sound as people had thought, it added to the problem.
The noble Lord, Lord Haskel, did not make this point; or if he did so, I hope that he will forgive my having missed it. Where is there mention of responsibility for that situation on those who promoted occupational pension schemes? Of those who said, "I'm leaving; I'm opting out of the scheme," how many were asked, "Wait a minute. Are you really doing the right thing"? Of course they were not, because it suits the actuarial balance of a pension fund to have people opt out. It is a matter to which the Government need to pay attention. As well as being chairman of an insurance company, I am trustee of an occupational pension scheme in another area. I am happy to say that in such circumstances the managers warned people, saying, "You realise what you're leaving behind". We had very few opt-outs from our scheme.
However, the industry remains pretty certain that a relatively small proportion of the people who bought personal pensions were given advice which was flawed, where pensions should not have been sold. As I indicated at the beginning of my remarks, regrettably, owing to a widespread misinterpretation of the original KPMG Peat Marwick report to the SIB, which was the subject of a highly coloured leak before it was ready for publication—the SIB did its best to indicate what the story was—it is widely believed that 90 per cent. of all the people who were sold personal pensions will be entitled to compensation. I suspect that that figure is at the back of the mind of the noble Lord, Lord Haskel: that millions of pensions were sold and that 90 per cent. of the people who bought them will be entitled to compensation.
That belief has been fanned by the press which is ever happy to find a jolly good whip with which to beat one of our institutions. However, one must make some points clearly. First, personal pensions are the right product for many investors. Many, especially the self-employed and those who are changing employment, will continue to find the flexibility of a personal pension the right answer. That is fully acknowledged by the SIB in its report.
Secondly—I shall be interested to hear the remarks of the noble Lord, Lord Peston—all political parties in the UK have long accepted the principle of private pension provision as a means of providing incomes in retirement. The noble Lord, Lord Haskel, referred to the value of the national insurance pension. It is essential that there is a great deal more private provision for pension for old age, and no doubt also for sickness through permanent health insurance and other methods, if we are to float people off dependence on social security. During my noble friend's Statement on social security upratings much was said about dependency. One of the best ways to reduce dependency is for people to make better provision for themselves. I should have thought that that was common ground for us all.
Thirdly, there has been no criticism whatever of personal pensions as a product. What has been criticised is the fact that some people received no advice, or wrong advice, and took out a personal pension when it
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was the wrong thing to do. Therefore, I ask the same question that the noble Lord, Lord Haskel asked: what needs to be done?
First, regulators and firms must seek to speed up the review of the many thousands of cases which they will have to examine in order to identify those where advice was clearly misconceived. I know what a long, time consuming and expensive business that will be. However, we have no option but to do it. To put the matter into context, in my company —having sold perhaps well over 100,000 pensions, many of them involving transfers or opt-outs—we have probably had fewer than 100 direct complaints. We are not expecting many —certainly very few from those schemes sold by our own sales force. We do not yet know about those sold through intermediaries. I shall come to that in a moment.
Secondly, before any compensation can be paid we must have the promised (it is a lovely phrase) prescriptive guidance from the SIB. It will not be an easy task to assess the compensation for those cases in which a pension was mis-sold. It can be stated in principle that the pensioner should be put into the position in which he would have been if the pension scheme had not been so sold. However, there is such a huge range of cases that it will be a difficult task. The sooner we have that guidance, the better. I understand why the matter is taking a little time; it is complicated.
Thirdly, it must be made clear to the public—it has been made clear by SIB and I have had it confirmed by the Government—that the standards of selling which have to be taken into account in deciding whether or not adequate advice was given are the standards which were in force at the time when the policy was sold. That is in the SIB paper. It is accepted by the Government but it is certainly not yet understood by the public. They are judging what they did five or six years ago by the very much higher standards which are now applied by the industry when selling.
Fourthly, and leading on from that, the authorities must move to lower expectations. People believe that hundreds of thousands of individuals are involved. It is unlikely to turn out to be that number.
Fifthly, we must make it clear that there is no redress for people who simply change their minds. They may have believed that they were going to change their jobs and that their decision was right. But come the recession, they did not change their jobs. Those individuals cannot just change their minds. They must take responsibility for their own decisions. There should be no compensation in the absence of evidence of mis-selling.
I hope that the noble Lord, Lord Haskel, agrees with me on this point. Every effort must be made to restore public confidence in the industry. There has been a significant fall of new premium income; and that must be reversed. We all have to work at the issue. The

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industry is thoroughly aware of its responsibilities. I beg people to recognise that expectations have been wildly exaggerated and must be reduced.
7.28 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I thank my noble friend Lord Haskel for introducing the debate this evening. It is a debate on an issue which affects us all; it is not the prerogative of any party or group of people. Pensions affect the overwhelming majority of people in Britain today. It is therefore regrettable that we are in the present position. In my industrial experience, one of the successes of the past 20 years has been the growth of occupational pension schemes. For the individuals concerned there is the income support that it will give them during retirement and therefore the confidence to look forward to retirement. They do not have to rely on the state and therefore the taxpayer. That built a confidence around pensions schemes. The reference to the strong arm of the insurance companies protecting the individual was believed by the majority of people. That confidence extended itself to occupational pension schemes.
There is no doubt that for some people occupational pension schemes are the answer. It is equally true that, in the world in which we now live, with changing employment patterns and shorter-term employment guarantees, personal pensions are the answer for many people. It is true that, with both of those, we need to restore the confidence which was there but which has been severely eroded because of the experience of the past few years.
The noble Lord, Lord Jenkin, mentioned the Maxwell fiasco, and I was very closely involved with it. Way back in 1986 when we started to have anxieties about the schemes that he took over with IPC and a number of other companies, we were told when we took professional advice that our anxieties were unnecessary. We could get no further with the inquiries we were making and that definitely created a lack of confidence among people. The exposure of the massive fraud and corruption in those schemes undermined the confidence of many people.
The problem is that the majority of occupational pension schemes in Britain today are well run. They have conditions which are within the proposals of the Goode Report. The effect has been not to drive people out of pension schemes but to start them becoming more involved and questioning the schemes more. That, coupled with the divulgence of the information relating to personal pension schemes to which my noble friend refers in the Motion, has created a tremendous lack of confidence. The issue is important not just because of that but, I suggest, because an occupational pension scheme is one which deals with deferred payment for employees. Apart from buying one's home, the individual personal pension scheme is probably the most important investment that any individual ever makes. So it is absolutely crucial that we have not only strong regulations but effective regulations covering the schemes.
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I shall not dwell on it this evening but great stress is caused by that lack of confidence and there is a need to get to grips with it and to introduce measures that will not only restore confidence but will also put in place strong support which guarantees that the undertakings that are given are met. That is important. It is too late when the horse has bolted from the stable, it is too late when we talk to people—as I had to—in their early 60s who expect to retire at 65 and are confident that they will get a decent pension but whose pension now has a big question mark over it. That creates a mass fear which may be ill founded, but who can blame people who feel like that?
The subject is also important for another reason. We are all living longer; there are far more of us in retirement in the community. The number is 10 million today; in 40 years' time it will have increased to just over 15 million. In pension accumulation terms, 40 years is not a long time and it is important that we have a savings philosophy within our society by which people either join an occupational scheme or provide for a personal pension scheme.
Those are the reasons why I welcome the debate this evening. The measures which have been introduced, such as the disclosure requirements from next year, have been welcomed across the board, from the responsible life assurance companies right the way through to occupational pension schemes. As long as they are effectively enforced, they are to be welcomed. Increased competition and knowing what one is paying for financial advice are crucially important in rebuilding confidence. Training programmes for sales people who sell personal pension schemes are important, as are standards of conduct within the selling of the schemes which are generally accepted and endorsed across the board.
We shall come back to the issue time and time again—and rightly so. We shall have the opportunity next year to discuss the Goode Report and the measures which it proposes, and it will be interesting to see which measures are taken up. Much of the lack of confidence and the lack of a feeling of security about the benefits which people felt they had within pension schemes will be dispelled, in my view, by effective regulation. It will be helped by not making it an ideological issue but a practical one that protects the personal investment which individuals make in their pension. That will be absolutely crucial.
I close my short presentation by offering my deep and sincere apology to the Minister and my noble friend Lord Haskel, as well as to the House. Unfortunately, I have another commitment which I cannot postpone and I shall not be able to stay to the end of this important debate.
7.35 p.m.
The Earl of Clanwilliam: My Lords, I thank the noble Lord, Lord Haskel, for this welcome opportunity. He mentioned at the end of his remarks that the matter would be dealt with in future legislation. That legislation will be able to cover all the problems that have arisen and solve those which the noble Baroness mentioned of the requirement to make proper provision for the future.

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That is one of the greatest problems for the pensions industry. Mis-selling is another matter which has been dealt with tonight.
I should also like to take the opportunity to congratulate the Government on the extension of the use of personal pension plans and the money purchase principle of pension provision. They are the right product for many investors, especially for the self-employed—a point which my noble friend Lord Jenkin has already covered—and those who leave occupational pension schemes. Many people are highly mobile and they will need personal pension schemes so that they do not rush from one lost transfer to another.
The success of the pension schemes is reflected in the number of people involved; I believe that a figure of 8 million has been mentioned since they were recommended, of which 5 million have opted out of SERPS. The 5 million did not all opt wrongly. It was quite a small number, about 500,000, who did. Many people opted into highly successful managed unitised pension funds with an excellent performance record and they are quite content with their lot. However, some were badly advised and they are the subject of today's debate. It is an extremely complex subject, in my view, as is the rather arcane system of many occupational pension schemes.
The noble Lord, Lord Haskel, referred to defined benefits, and many occupational pension schemes are money-purchased too. They are important and should be retained at all costs.
Be that as it may, the Government are to be commended not only for setting up the Pension Law Review Committee but also for their measured, responsible and comprehensive response set out in Volume II of the Secretary of State's document.
One concern is the cost of the actuarial assessment. I was listening the other day to some actuaries at a meeting upstairs in your Lordships' House and they mentioned a figure of an initial charge by them of £200 million before they could get anywhere. That figure is daunting. That there has been mis-selling is painfully obvious and the SIB report will be with us for a long time. No doubt it will take up many hours of your Lordships' House in discussion. I suspect that confusion will be worse confounded by the fact that many insurance companies have no records left of some of the subjects which need to be discussed.
One of the extraordinary factors is the motivation of a member of an occupational pension scheme. Two-thirds of his contribution is paid by the employer, but he suddenly decides to take a personal pension plan. Apparently he forgets that he is getting two-thirds of his pension contribution from his employer and he then has to pay the whole amount himself. How many people are there like that? It is claimed that there are many. Who would leave such a plan? It appears that there are people, including nurses, who did this. It is horrifying to think that people can be so irresponsible with their own money.
The SIB has laid down clear rules and the companies will have to act with all speed as soon as the letters that they have sent to their clients asking them to submit a complaint if they have one are returned. It will take a
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long time before all those letters come in. I am sure that pension companies, such as that mentioned by my noble friend Lord Jenkin of Roding, will perform their task with admirable responsibility. We cannot do much about that. We just have to wait and see what comes out.
It will be disastrous for many of the independent advisers, many of whom stand to be wiped out. They would be a great loss to the industry. There are some rogues and some very good advisers, but it would be extremely unfortunate if they were to be wiped out. Many of them will be unable to make reimbursement as calculated by the actuaries. The question that the noble Lord, Lord Haskel, asked is: who then will pay? I have no answer to that.
Much of the blame will also be levelled at the commission salesmen. Now that there is to be total revealing of all commissions I believe there will be a change in the industry. Because of the considerable up-front charge of a commission-only salesman, it is likely that most salesmen will be put on to a salary. The level of return will still be the same, but it will not be so frightening to the prospective user of a pension plan if he suddenly finds that a large lump of money will go as a prepayment against future premiums to the employee.
As a result of the furore, regulations instituted by Lautro, for instance, require immense detail to be provided and considered by salesmen and by the companies—not necessarily to much avail. The principle of caveat emptor seems to have gone by the board in the welter of regulation. Are estate agents and car salesmen required to ask the client whether he has enough money to buy the car or the house? Is he asked to explain what his income is? No, he is not. But under the new Lautro regulation that is necessary. It seems to me to be quite ridiculous. Certainly, if you are in somebody's private room and you are discussing their personal affairs, you have to discuss the matter in detail. But the six-page documents are only confusing. They are as confusing to the prospective investor as they are to the adviser.
The noble Lord, Lord Jenkin, also mentioned the problem of the occupational pension scheme. The occupational pension scheme trustee should surely have made representations to individuals and should have told them what would be the result of their move out. It seems extraordinary to me that they did not do that. It is also very odd that many of the transfers that were arranged by the actuary were extremely low. The transfers were calculated from a number of notional factors, including the interest rate prevailing at the time of the transfer. That interest rate is quite irrelevant. The only matter that is of interest to the person who will be a pensioner is what the rate will be at the time he retires. So many of the factors that are produced by the actuaries are extremely inaccurate.
Occupational pension schemes were originally invented as a reward for long service and loyalty. They became an anchor, and indeed a threat which inhibited mobility of labour. At the same time, the assets became an important item in the balance sheet. There is no harm

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in that. But it became a major factor in takeover bids, and, as we now know, was a temptation to use the assets as collateral.
That threat does not apply to the money purchase schemes, where policies are in individual names and are unlikely to be acceptable as collateral even if offered. Many excellent occupational pension schemes are run by our greatest companies, which are exemplary. Of course they serve a wonderful purpose for those people who will spend 40 years in one job. But there are not so many of them today. It will no doubt be the job of this House to work out a suitable plan when the pensions Bill is finally brought before us. I have various suggestions to make in that direction.
As I said, many of the occupational pension schemes are based on money purchase, and the money purchase principle is the one that will be most effective. The cost of occupational pension schemes of some 15 to 16 per cent. of salary is ludicrous. If you put that money into a personal pension plan, you would end up with telephone numbers.
I am confident that my noble friend's plans to remedy these problems and faults will be successful. I look forward to hearing his reply.
7.46 p.m.
Lord Desai: My Lords, we are grateful to my noble friend Lord Haskel for bringing this matter before us. It is of some interest that this particular problem of pensions has been discussed again and again lately, more by this side of the House; indeed it is we who initiated the discussion. We discussed the matter last June when my noble friend Lord Jay, who unfortunately is not in his place, initiated a debate.
The reason is that it is quite clear that in occupational schemes and in personal pensions there has been something akin to a disaster over the past few years. That disaster was not only foreseen; it is a manufactured disaster. When we look at the history of how the transfer to personal pensions was encouraged, indeed debated, we see that in a sense not enough care was taken to make sure that what people were being sold was properly vetted and tested.
The enthusiasm for the transfer to personal pensions was such that one almost suspects—one cannot quite allege it —that misinformation was generated: a price distortion. In a free market if you had price distortion and signal distortion wrong decisions would be made. I do not say this lightly. The noble Lord, Lord Jenkin, made a remark about individuals taking responsibility. The nice thing about this episode is that the individuals who were responsible for the disaster have not taken responsibility. Mr. Norman Fowler, who was Secretary 'of State at the time, would seem to be very proud of what he did. In his memoirs, Ministers Decide, he says:
"Yet in many ways the most spectacular success has been the new pension options. Over four million people have taken out personal pensions. Over 800,000 people are now covered by new occupational pension schemes. Contrary to the industry's predictions, existing company schemes have not collapsed. The public have been provided with more choices, and have shown that they want a pension which is theirs by right".
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The estimate of how many people got it wrong is, I agree, perhaps not as high as 83 per cent. That was a false figure. Perhaps it is only as many as 500,000 people.
The noble Lord spoke about selling a car. The context is quite different. The person who sells a car does not have to know whether the buyer has the income to pay for it. But it is irresponsible to sell an unsafe car. That is the problem. The fault does not lie with the purchaser but with the seller.
The noble Lord, Lord Lawson, who at the time was the Chancellor of the Exchequer, wrote in his memoirs:
"First, the tax reliefs enjoyed by occupational pension funds were extended to personal pensions whose promotion had been one of the main purposes of the Fowler reforms. They were taken up on a positively embarrassing scale, partly because Norman had persuaded me to provide, at least on a temporary basis, excessively favourable National Insurance contribution rates for those who contracted out of the State Earnings Related Pension Scheme in order to invest in a personal pension scheme".
The Chancellor of the Exchequer was embarrassed by the concession he had made. Obviously, he made the concession because a propaganda campaign had been mounted, which was close on misinformation, generating anxiety about SERPS.
Noble Lords have spoken about mobility and how, in our great and changing age, many people want to change jobs. While it is true that occupational pension schemes discouraged mobility, SERPS did not do so. If people had been concerned only with mobility, they could have stayed in SERPS.
Let me quote what my noble friend Lord Jay said during the debate on 15th June this year. He offered a quotation from Michael Prowse, one of our better economics correspondents, who wrote in the Financial Times:
"The original SERPS had all the virtues of a good pension scheme. It offered exceptionally low administrative costs, job mobility and maximum security in old age. Nothing in the private sector can match this combination of virtues". —(Official Report, 15/6/94; col. 1750).
That was said in the Financial Times, not in Tribune—and not by me, either.
Let us be clear that SERPS was a good scheme. First, the Government started to undermine the benefits under SERPS; and then they spread the rumour that, because the dependency ratio would change, SERPS would become too expensive. A moment's thought would show that how a society pays for its pensions is a kind of macro-economic point. Those who are in work pay for those who are retired, whether it is a funded or an unfunded scheme. If those who are in work refuse to pay for those in retirement, there will be only inflation and a strain on resources. Basically, in such a transfer between generations—this is a sound economic theory; I know what I am talking about—there needs to be a scheme which comprises low administrative cost, low risk to the taker and good information and is one from which society as a whole can benefit.
I respect the free market. Some of my best friends are free marketeers. However, in the free market lodge, there is a strange contrast between the UK and the USA. In the USA there is a free market but they have zealous regulators. They do not just believe in laissez-faire; they

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believe in competition. They believe in the free market, an open society and transparent information. They believe in thorough regulation. In the UK, especially over the past 10 years, in enthusiasm for the free market we have let these schemes go on and, four or five years later, various people have paid the cost of unregulated free enterprise. In a sense much of the privatisation and deregulation has been an outdoor relief scheme for the City, which has made a lot of money out of it. There was a market failure and no proper regulation. No one was in place to regulate the kind of schemes that insurance companies were selling. It was not even asked whether they had properly trained staff. Staff training for financial operations is only now beginning to occupy the minds of people in the City. There was self-regulation and of course it failed.
Only after some 500,000 people have lost something on their personal pension—that is 10 per cent., which is a high risk factor—and only after occupational schemes have failed do we have a stream of reports: the Goode Report; the Government's response to the Goode Report, in two volumes; and another little response to the Goode Report. There will also be legislation. Why could it not have been seen beforehand that a disaster would be bound to happen if such a huge reform were mounted and it was not checked out whether the seller had the capacity, authority and information to be a good seller—especially if the attractiveness of one asset as against another was being distorted, basically bribing people to buy that asset.
The Government want to have free markets and believe that deregulation means no regulation. Deregulation makes a move from what is perhaps an over-interventionist scheme to one where a proper choice can be made with full information about the costs and benefits of the choice being made. What happened in the case of personal pensions? The SIB said—again, it is not lightly said because the SIB tries to be extremely polite about these matters—
"The City is satisfied from all the information it has that some of the business was done in a materially non-compliant way and some of the investors concerned will be found to have suffered loss as a result of unsuitable advice".
How lovely! Only this afternoon there was a Statement read in this House from the Secretary of State for Social Security. He was pursuing people who were scrounging and defrauding the social services. They were probably defrauding the social services of £10 or £20 each, which is not very much. The suffering of the 500,000 people in those personal pension schemes far exceeds the amount of money which at the next Tory conference the Secretary of State for Social Security will boast about having saved. Nothing has been done to punish the people responsible. No Minister has apologised in public, either in this House or the other place. It is assumed to be due to market failure and the fact that this sort of thing happens. People have to be responsible for what they undertake, and the buyer should beware. But what about the seller? Why does only the buyer have to beware? Why is something not done about the seller? Why are not proper regulations laid down?
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It is very easy to say that it was done "in a materially non-compliant way". More simply, people were lied to. That is what it was. It was mis-selling. I am sorry to say that there has been very little done about mis-selling.
If we are to have a free market, we should adopt the American standard. We have to be aware that free markets fail. The answer often is not intervention but regulation —intelligent regulation. Let us have that. It was a mistake to undermine SERPS. Having lost the one good pension scheme that we had, we have undertaken more expensive ones. I believe that we shall have to spend a lot of time getting back a properly supervised and properly regulated pension scheme in which people will have confidence. To restore confidence in the pensions industry will take a very long time. It will be very costly.
8 p.m.
Lord Meston: My Lords, the first part of the Motion for debate this evening calls attention to the consequences for those who transferred from occupational and other pension schemes. The problem concerns not just those who transferred out of existing schemes—those are people who can be identified —but also those who opted not to join established occupational schemes, who are less easily identified. They will have to be identified as the mess created during the 1980s is cleared up in the course of the 1990s.
It is now clear that the consequences have indeed been serious for a large number of people; just how serious and how many people were affected we shall probably never know precisely. I suggest that there is a heavy onus on the pension companies to try to find out as quickly as possible. It is a truism that existing pension entitlements which were transferred by people in their thousands were hard earned. That looks to the past. For the future, the preservation of the values of accrued pension rights during the 1990s and beyond becomes an all the more important part of everyday life as people live longer and no real job security can be assured.
The activities of those who misadvised and misled people into entering unsuitable pension arrangements with hidden costs have created a large additional measure of anxiety and uncertainty in the lives of those who relied on such people and on their representations. They paid a high price for flexibility and choice, and other slogans which lay behind the move to opt out of schemes to which people already belonged.
The exposure of this disaster—I fear that is not an overstatement of what happened—led to a large amount of finger-pointing and buck-passing. The pension companies and their commission-driven agents must obviously take the main blame and bear the main cost, presumably at the expense of their shareholders and other policyholders. I welcome the remarks of the noble Lord, Lord Jenkin of Roding, in his description of the improvements in the culture of the present pension market. I hope he is right and I hope that the enlightened self-interest of the pension companies will ensure that there is no repetition of this sort of mishap in the future. I cannot help fearing that he may be over optimistic.

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The DSS can be blamed for advertising to encourage people to opt out of occupational schemes in favour of private plans. As the noble Lord, Lord Jenkin, observed, the trustees of existing occupational schemes can be blamed for not advising caution. Employers can perhaps also be blamed for not advising caution in a situation in which they stood to save the cost of their contributions to the existing schemes if employees could be encouraged to go elsewhere. Certainly the SIB can be blamed—as it has been—for not acting faster, thus delaying both relief for investors and increasing the final bill for the pension companies.
As matters stand it seems that people also lay blame on administrators of occupational pension schemes—including the Treasury in respect of public-sector schemes—for putting too high a price on allowing reinstatement into their schemes. Finally, as we heard from the noble Earl, Lord Clanwilliam, among others, individuals themselves may be blamed, particularly if they have to fight for the compensation to which they feel entitled, for allowing themselves to be misled. There is an unattractive prospect of pension companies and their agents and independent advisers arguing that they in fact offered no advice, or no advice which could have been expected to be relied upon by the individuals whose business they were seeking.
The second part of the Motion for debate requires attention to remedies and future protection. It seems that there must be two priorities. The first is to ensure that the victims are identified and are then compensated fully and quickly. Like any other victim of somebody else's culpable acts or omissions, those individuals should be restored to the position in which they would have been had they remained where they were. I entirely accept that that exercise may not be easy and that there may be difficulties of computation and projection. But the Government owe a responsibility to provide publicity corresponding to the publicity which enticed people out of existing schemes in the first place. They have a responsibility also to exert pressure in the appropriate quarters so that victims do not have to cross a legal minefield full of arguments which anyone can see could be levelled about disclaimers, limitation periods and the like. It should not be too much to hope or to expect that pension companies, anxious as they properly are to restore confidence, will accept liability and that in the great majority of cases the only discussion will be about quantum and the method of compensation.
It is also to be hoped that in more difficult cases, where those being offered a compensatory sum can justify the need to have a second opinion on the amount being offered or the method of compensation, the pension companies will, where appropriate, pay for independent actuarial advice. I am afraid that that 'regrettably raises the problem behind the old saying that if you put a question to two actuaries, you are likely to obtain three different answers.
The second priority is to ensure that, so far as possible, this does not happen again. The pension companies will surely be looking at their commission structures; that means not only at the way in which commission forms the major part of the agent's
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remuneration, but also at the way in which commission is higher for some types of product than for others. For example, as I understand, it a lower commission is typically payable for a single premium plan than for an annual premium plan. Obviously that can affect the advice that is given to the individual consumer. In that respect the proposed introduction of a declaration to the consumer of the commission payable to the intermediary or agent is long overdue and we all look forward to the improvements that that will undoubtedly bring about.
I suggest that the Government must take a hard look at the regulatory and statutory framework. I am sure there can be no doubt in anybody's mind that the Financial Services Act would not have left Parliament as it did had the mess now revealed been properly foreseen at the time. The Companies Act 1989 made some changes; but they do not go far enough and there remains a great deal of red tape behind a bewildering array of acronyms.
This is not the time and place to analyse the weaknesses of the present structure with the delegation by the SIB to various SROs. The clear lesson is that the structure involving the SIB providing guidance—and little more than guidance—to SROs, albeit a reduced number of SROs, has not proved adequate. What is now needed is one overall regulator concentrating expertise in a single body and possessing true independence from the financial services industry and from the Treasury; a body willing to defend the consumer and willing to take on the government of the day. If that is not possible in the short term, at the very least the SIB should now be accountable to Parliament and not merely obliged to report as at present. I suggest that the lesson to be learnt is that, unless there are fundamental changes, regrettably something like the disaster described by the noble Lord, Lord Haskel, will happen again.
8.9 p.m.
Lord Peston: My Lords, I congratulate my noble friend Lord Haskel on his clear and cogent introduction to this debate. Perhaps I may also say how much I am looking forward to the speech of the noble Lord, Lord Mackay of Ardbrecknish. Everything he has to say in your Lordships' House is interesting and sometimes it is even convincing. But let me say that I do not remotely regard this topic as being about social security. It is about economics, industry, finance and regulation, which is why I am speaking.
Perhaps I may say a few brief words on the facts. I do not know where the noble Earl, Lord Clanwilliam, got his figure of 500,000 from. The Securities and Investments Board itself has said that nearly 1.5 million people have been wrongly advised in a personal pension plan. Estimates of the compensation bill range from £1 billion to £4 billion. The noble Lord, Lord Jenkin of Roding, used the expression "relatively small proportions". The numbers seem quite large to me. I also have to tell noble Lords that it is always dangerous to discuss matters like this in terms of ratios.
The Earl of Clanwilliam: My Lords, I may be wrong in the figure of 500,000, but the point at issue is that no one is going to know how many have been mis-sold

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until the industry has sent out its letters and replies have been returned. Any figures that are mentioned in the meantime are pure speculation.
Lord Peston: My Lords, I certainly agree with the noble Earl that we need more convincing figures. But I am not convinced that any figures up to now are pure speculation—most certainly not. The main point I wanted to make about ratios per se is that, if you are one of those who has suffered, the only ratio that interests you is 100 per cent.—namely, you. That is what we ought to be concerned with.
Turning to matters of principle, we all accept, I am certain, the vital importance of the pension decision. Unlike most ordinary purchases, a mistake has long-term consequences, and when those consequences are adverse they are extremely difficult, if not impossible, to rectify. Again following the noble Lord, Lord Jenkin of Roding, of course individual people have to take financial decisions, frequently involving pensions. I readily agree that many are capable of doing so sensibly. I myself have done precisely that, taking advantage of the very generous tax concessions which one gets under a Schedule D form of income. But it is known and well established that quite a lot of otherwise rational people blunder when it comes to financial matters. They are naive, they are trusting and they are excessively optimistic. That is why consumer protection is so important. I hasten to add that by "protection" I do not mean compulsion. In the end, while intervention can help, someone who is intent on financial self-destruction cannot be prevented from doing so. But that is not the point. The real point concerns what kind of protection is required.
The point was made by my noble friend Lord Desai that central to any form of protection is information and, if I may add to that, information that is readily comprehensible. Secondly, there really must be much stronger constraints on the hard sell. No one should be allowed to sign a binding contract in this area without a cooling off period of significant length, but that cooling off period should require at the end a positive decision—namely, it is now my decision to go ahead—rather than the negative decision that people like—namely, if you do not hear from me, let it go ahead. That will not do in this case.
Next—and this, I agree, is an extremely difficult matter —all purchasers should have access to advisers with no financial interest whatever in the sale of the pension. All financial products should carry a financial health warning. That should be in large print and not in print smaller than anything else in the advertising or other relevant documents. In terms of pensions, what we are saying is that, at the very least and in very clear terms, all purchasers should have been informed that, while what they are being offered is hoped, even expected, to give them a net benefit compared with what would otherwise be the case, there is a distinct possibility that it will not. In addition—this again has been raised by my noble friend and by other noble Lords—there should be a proper and easy-to-use procedure for the redress of grievances. That is less to protect the foolish and the greedy and more to protect the trusting. That is what has gone wrong here. Those
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people who believed in the probity of our financial institutions—notably in the insurance companies, the pension funds and related financial concerns—have been let down and they should never have been let down. That will simply not do.
Who is to blame? Many noble Lords have asked that question. The Government, initially, were seriously at fault. They were partly seriously at fault because of their antipathy to public expenditure and partly because of an ideological commitment to the market, which I increasingly believe they never had the faintest understanding of. My noble friend Lord Desai has made that very clear. They mouthed the words of the free market but they had no idea of what they were talking about. But—I say this to my near namesake, the noble Lord, Lord Meston—it is not the case that when we were discussing legislation on this matter there were no warnings. The dangers that were involved were made very clear, both in connection with these matters and in connection with financial regulation and self-regulation generally.
There is nothing surprising about what has happened. We are unhappy about it but certainly there were warnings. Therefore, the Government cannot possibly be allowed to wash their hands of any or all of this. What has really emerged —here I echo the remarks made by other noble Lords—is the failure of financial self-regulation.
What worries me—this is a broader question than simply to do with pension mis-selling—is that in all sections of the financial services industry the rules are being consistently and comprehensively flouted. The Consumers' Association has published research confirming that. In several different issues of Which? it has published evidence of bad advice and commission bias among the banks and building societies and among mortgage brokers with regard to mortgage advice. They have given bad investment advice to people who have been made redundant. To say the least, the advice given about life insurance has been mixed. I am certain that the article in the September 1994 issue of Which? would be of some interest to the noble Lord, Lord Jenkin of Roding. I can tell him that it is definitely in the Library. Therefore, what we ought to be saying is that the lessons required here are lessons about regulation. I have to say that I no longer believe that self-regulation is remotely viable. We must have statutory regulation, but of a simple kind.
Coming to my final remarks, the real villains of the piece are the sellers of the pensions themselves. We have to decide whether what we have witnessed is simply senior managerial incompetence—a failure both to set standards and to control the lower level staff—or whether it is much more serious still; namely, whether monetary greed was the root cause, the desire to make a quick buck. I should like to believe—although given this choice, it is not much of a choice—that our insurance companies and pension funds are not greedy: they simply did not do the job properly. Perhaps both factors were at work.
Despite all the talk about these matters being difficult to calculate, that it is difficult to get evidence and that actuaries are not helpful, the fact remains that the

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outcome has been that pensioners have suffered and will continue to suffer unless something is done. Given that, it must also be the case that shareholders and some managements have gained. If those who have suffered are to be compensated—I believe they must be—then those who have gained—the shareholders and managers—must pay. They must bear the cost.
My noble friend Lord Haskel, I assume tongue-in-cheek, suggested that perhaps future buyers of such products would pay with higher premiums. We must distinguish always—economists are very keen to distinguish this—the "will" from the "should". It would not surprise me in the least if those of us who are still buying insurance of various sorts are asked to bear the cost. I think that that may be what various parties will try to make happen. There is not the slightest doubt in my mind, however, that we should not be asked to pay for that. There is no doubt in my mind that the cost must not come from raising insurance premiums. It must come from the shareholders who freely bought the shares, if I may take a free market view, and from the management who freely took those decisions. They must now bear the consequences of their actions.
Finally, because noble Lords will be upset if I do not say this, the Government cannot be allowed to get off the hook. They cannot say that this is a matter for the Securities and Investments Board and the industry. The Government must show some leadership quality and get things done. And in the light of what we have heard today, they must get things done rather quickly.
8.20 p.m.
Lord Mackay of Ardbrecknish: My Lords, as a number of noble Lords have pointed out, choosing a pension is one of the most important financial decisions that most people will ever have to make. I believe that it comes second only to buying a house. I therefore welcome this opportunity to explain what the Government and the regulators are doing to ensure high standards of investor protection and to provide remedies where these standards have not been met.
During the debate, we have heard from noble Lords who have considerable knowledge of the pension industry and involvement in company pensions schemes or in life companies. We have also heard from two economists—we may have heard from more than two, but we have certainly heard from two whom I recognise from our previous debates on financial subjects.
Personal pensions play an important role in the Government's strategy for bringing about a sustained improvement in the general level of income of those who have retired. I doubt whether any noble Lord would disagree with that. The availability of occupational 'pensions and personal pensions widens choice and encourages more people to plan for their retirement and to build a solid base of funded pension provision for the future.
The noble Lord, Lord Haskel, mentioned future problems due to the fact that a smaller working population will be paying for increased provision for a large elderly population. That is precisely why the
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Government took measures in the mid-1980s to widen choice and to give people more ways in which they could make provision for their retirement.
Before we reformed pension law in the 1980s, employers could require people to join their scheme as a condition of employment. Where no employer's scheme was available, people had no option but to contribute to SERPS. We ended compulsory membership of a particular scheme and gave people the freedom to plan for the pension which best suits their needs, whether it be state or non-state, occupational or personal. As my noble friend Lord Jenkin mentioned, before the reforms, no one who changed jobs had the right to move his or her pension. Now everyone has the option of transferring accrued pension rights. Those who chose not to transfer now see their pensions protected against inflation. People also have the right to make top-up payments either to their employer's scheme or by way of free-standing contributions.
By widening choice in this way, the Government have enabled more people to make appropriate provision for their retirement. This strong foundation of privately funded pensions leaves us well placed to face the challenges of the next century.
It is well worth putting the numbers on the record because several noble Lords have referred to the number of people who are involved in making their own pension provision either through occupational pension schemes or through a personal pension scheme. The latest figures that I have available show that 10.7 million people of working age are in occupational pension schemes and that something like 60 per cent. of them are in the private sector. Furthermore, 3 million people of working age have a preserved pension from a former employer and a further 1.5 million people have a preserved pension from a former employer and are now members of their current employer's scheme. Noble Lords can therefore see that a considerable number of people are involved in occupational pension schemes. In addition, 6.5 million people who are retired right now are receiving at least one occupational pension. Currently, 20 million people have rights in an occupational pension scheme.
People with personal pensions are additional to that number. Since June 1988 we have now reached a situation where 7.8 million people are in personal pension schemes. It is well worth saying that it is thought that about 6 per cent. of that population were opt-outs and that about 13 per cent. were non-joiners of their occupational pension scheme. That comes to slightly less than 20 per cent. of the total number of people who have taken out personal pension schemes.
An effort has been made to quantify the number of people who acted after advice from a personal pensions salesman. It would appear that, on opt-outs, about 4 per cent. of the total took such advice. The number amounts to just over 300,000 if my arithmetic is correct. Of non-joiners, the proportion is 7 per cent., which amounts to just over 500,000 people. Those are the figures with which we are dealing.
People will, of course, be willing to save for retirement if they believe that their pension rights will be secure. That means that they must receive the

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information that is required to enable them to make an informed choice. The noble Lords who are economists told us that that was an important part of the operation of the free market. I agree. People have to be able to rely on the highest standards of expert advice. They must be able to have confidence that the regulatory framework will protect their interests against the unscrupulous and the incompetent.
The Securities and Investments Board, the chief investments regulator, has taken a series of steps to ensure that investor confidence is maintained. First, it identified the problem; publishing evidence last December that many sales of personal pensions appeared to have fallen short of the required standards. Then it acted to prevent the recurrence of these problems. Now, with the help of expert advice from the life and pensions industry, SIB is ensuring that remedies are provided where necessary. I believe that that is an example of an effective regulatory regime.
The board's recent statement sets out how compensation should be provided for people who have personal pensions instead of being in an occupational pension scheme and who now face financial loss as a result of bad investment advice. As my noble friend Lord Jenkin of Roding rightly pointed out, that does not mean that anyone who changes his or her mind is entitled to compensation. The question is whether bad advice was given. If anyone with a personal pension is found to face financial damage as a result of mis-selling, he or she will be entitled to redress. The aim will be to restore people to a financial position equivalent to that which they would have had if the mis-selling had not taken place.
There is at present no way of knowing the eventual total cost. I am not a clairvoyant and I shall resist the invitations to speculate. We must all wait for the reviews to be completed. It is, however, clear that there will be a substantial call on the financial services industry. Investors can be reassured that the industry as a whole can and will pay. In cases where the firm responsible has ceased trading, that will entail calling on the industry's compensation scheme.
The SIB statement sets out in detail how firms responsible for sales of personal pensions should review their cases; how they can identify mis-selling and damage to investors caused by it; and, where mis-selling leading to financial damage has occurred, how appropriate redress should be provided. The details of the review process and the formula for redress have been drawn up with the assistance of experts in the life and pensions industry and in the legal and actuarial professions. The regulators will now ensure that firms responsible for past pensions business take the necessary 'steps to review their casebooks. The Personal Investment Authority has set up a pensions unit to examine cases sold by firms which are no longer in business. It has also set up a pensions helpline. I advise the noble Lord, Lord Haskel, that its hours of opening are similar to those of our very successful helplines in the Department of Social Security, so I do not think that his criticism was merited.
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Many people will be contacted by the firm which sold their pension, or by the pensions unit, and asked for information to help decide whether further investigation is required; SIB is distributing an explanatory leaflet, the Investor's Guide, which will also be available from libraries and citizens advice bureaux.
It will take at least two years to carry out the reviews in an appropriately thorough and systematic way as the interests of both personal pension holders and other policyholders require. The first cases to be reviewed will be those where financial damage caused by mis-selling is most likely and where this could have the most immediate impact. These priority groups include the cases of investors who have died, retired or are close to retirement. However, any personal pension investor who seeks it will have his or her case reviewed whether or not he or she is in a priority group.
These reviews will no doubt show that many people who transferred to or opted for a personal pension were given good advice. Where redress is required, its form will depend on the circumstances of the investor. Where possible, it will often be desirable to reinstate people in their occupational schemes. If this cannot he done, the personal pension will usually be topped up.
The action announced by SIB relates to people who bought personal pensions in preference to an occupational scheme. There are many others who would otherwise have been contributing to the State Earnings Related Pension Scheme (SERPS). SIB is also investigating, with the help of DSS, whether there has been mis-selling to people in this position. SIB intends to publish its findings in this further review next year. If a problem is revealed, SIB will prescribe appropriate remedies.
The Government are also taking action to make sure that the arrangements for redress are brought into effect as efficiently as possible. The public service pension schemes, such as those for teachers and nurses, are allowing current employees not only to rejoin for future service but also to have their pension rights for previous service restored at reasonable cost. I very much hope that occupational schemes in the private sector will adopt the same approach.
The Government have also clarified the tax treatment of compensation payments. All the remedies are designed to put the investor in an equivalent financial position to that which would have been the case if the mis-selling had not occurred. The Chancellor intends to introduce legislation in due course to ensure that an investor in that position will have the same tax bill as if there had been no compensation payment for mis-selling.
Some noble Lords have suggested that, as the Government were responsible for the introduction of personal pensions, the taxpayer should provide compensation. There is no case for this. The concerns that have been identified—
Lord Peston: My Lords, I do not think anybody said that today, did they? I may have missed it, but I do not

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think that any of us suggested that the taxpayer should bear this cost. I am sorry to have interrupted the noble Lord.
Lord Mackay of Ardbrecknish: My Lords, perhaps I was rather taking that out of what one or two noble Lords had said: that the Government were responsible and ought to take the blame. I was rather going ahead of myself there, and deducing that that probably meant that the Government should pay compensation. If I jumped to a wrong conclusion, as has been indicated to me, by the shake of his head, by the noble Lord, Lord Desai, then I happily withdraw that suggestion.
Lord Desai: My Lords, perhaps I meant that they should have resigned sooner, but that is all.
Lord Mackay of Ardbrecknish: My Lords, that is nothing new. The noble Lord thinks that the Government should resign every day, and I have no doubt that he will go on for a good many years thinking that the Government should resign. However, perhaps I may say that in 1988 when we launched personal pensions, the main booklet for employees did carry a very clear "health warning", if you like—good company pension schemes may well remain the best choice for most people entitled to join them. My noble friend Lord Clanwilliam made that very point, that some people must have been very foolish to think they could get a better buy by taking themselves out of an occupational pension scheme where their employer contributed a significant amount of money to their retirement package.
Having said that, however, there is no doubt that personal pensions remain a flexible and entirely suitable way of saving to provide a secure income in retirement for a great many people. They can make it possible to maintain a mobile and varied career with a good pension, and also of course those jobs and careers where there is not an occupational pension. These advantages will no doubt ensure that personal pensions will continue to appeal to many people. I have no doubt that they will continue to have a significant role to play in future pension provision.
However, for people to choose personal pensions with confidence, they must be able to rely on high standards of professionalism on the part of those responsible for selling them. They must be able to trust advisers and sales staff to recommend suitable products. That is why SIB defined new and tougher standards for future sales of personal pensions. Everyone who has mentioned it, I think welcomes and approves of things like full commission disclosure. As a result of SIB's new standards, investors choosing between occupational and personal pensions now get a "reason why" letter to explain each personal pension sale, backed by sophisticated analysis of their own personal circumstances.
The regulators are following this up with more intensive supervision of sales. The Department of Social Security has also issued guidance to employers about the advice they may give to any of their employees considering a personal pension. These new standards are backed up by more demanding training and competence
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requirements. Financial services firms are already implementing the new standards. So people making decisions about whether to buy a personal pension instead of belonging to an occupational scheme can have confidence in the quality of the advice they get.
My noble friend Lord Clanwilliam asked me about the SIB's approach to the independent financial advisors, and how many, if any, of them would be driven out of the industry. We recognise the value of independent financial advice in providing customers with additional information and extending choice. Of course we regret any failures among independent financial advisors. However, where they have failed to meet regulatory standards they must accept responsibility for providing a remedy, and, unless investors know that this will happen, they will not have confidence in that sector, or possibly in the industry as a whole.
The noble Lord, Lord Haskel, seemed to feel, as perhaps did the noble Lord, Lord Peston, as well, that there was need for more statutory regulation. However, we believe that we already have regulation enough within the statutory framework and we do not believe that the costs and disruption of a major change to the system would in fact be justified. Both noble Lords suggested that policyholders should not be expected to meet the bill for mis-sold pensions. It will of course be some time before individual companies can assess their exposure and decide how it should be funded. As the prudential regulator, the DTI has written to all life companies setting out the general principles which should be followed when making this decision. Firms with shareholders should consider whether their funds should meet some or all of the cost, while with-profit offices which have sufficient free reserves will be expected to use these funds rather than cutting current policyholders' bonuses. The overall effect will be that policyholders' interests should be protected as far as possible. All policyholders of course do have an interest in knowing that, when investors lose as a result of a firm's failure to comply with the rules, they will receive redress. With-profits policyholders will also benefit from seeing that their company maintains its reputation, restores consumer confidence and so attracts new business.
The noble Lord, Lord Desai, took us down the SERPS trail, if I may call it that, and indicated that perhaps people ought not to have been encouraged to move into private pension provision there. Perhaps I can say to him that, of the 5 million people who have taken out a personal pension in place of SERPS, more than 40 per cent. are making contributions on top of those received from the Department of Social Security to boost their income in retirement: that is new money being invested to provide extra security in old age and money that could not have been paid into SERPs. So I do not think the argument on that score is entirely one-sided.
The noble Lord, Lord Peston, suggested to me that all financial products should carry risk warnings. Could I say to him that the new disclosure regime involves a "key facts" page, which includes risk warnings and this document has been market tested on consumers to

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ensure that we, the consumers, can easily understand it. So I hope that the noble Lord will consider that to be a step forward.
Again, a number of noble Lords "dipped their toe" into the question of occupational pensions, and of course that is going to be the subject of many happy hours of debate, as I described them earlier today, when we come to consider the pensions Bill which will shortly appear. I will say more when we come to that, I have no doubt. Of course we have to tackle that problem—a problem coming from the erosion of confidence caused by Mr. Robert Maxwell. I understand fully the difficulties that the Maxwell pensioners have had, just as I understood some of the difficulties some of my friends had when huge writs were served on them by Mr. Maxwell to try to get them to keep their mouths shut when they dared to criticise someone whom, I regret to say, far too many people considered for many years to be a great man.
Perhaps I may conclude by saying that the regulators' central aim has been to devise a mechanism which ensures that where harm has been done it will be put right. They have sought to do that reasonably and fairly, working with the industry to secure a just outcome as quickly as possible, while minimising administrative costs. Although their approach has been criticised from various, and sometimes contradictory, directions, as is the way with such things, the Government believe that the SIB has acted with commendable thoroughness and independence.
I have no hesitation in concluding that the system of regulation in which the SIB takes the prime role, and which benefits from major practitioner input, is sound, and working effectively to protect investors. The reforms instituted by the SIB review last year are beginning to bear fruit. The financial services industry plays an important and growing role in a sophisticated modern economy such as ours. Increasing affluence means that people will more often have resources available for investment and will want to invest. They must be able to invest with confidence. A clean, well-regulated market is in the interest of consumers and financial services firms alike.
8.41 p.m.
Lord Haskel: My Lords, the hour is much later than we expected and so I shall not detain your Lordships for long. We have had a debate which covered several Government departments: investment and savings; finance and regulations; the benefits system. Noble Lords have spoken on all those aspects, and I thank them for their participation. All noble Lords have shown a concern for the consumer, and many have spoken of the need for better regulation.
The noble Lord, Lord Jenkin, spoke of the need to speed up the review which is in progress, and I heartily agree with that. The noble Earl, Lord Clanwilliam, spoke of the need for caveat emptor, and I repeat the response given to him by my noble friend Lord Desai: in today's world, the seller is responsible for the suitability of the goods that he is selling.
I agree with the noble Lord, Lord Meston, about the importance of pensions at a time of job uncertainty. I thank my noble friend Lord Peston for speaking about
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the need for proper regulation. I agree with him entirely. I was pleased when the Minister told us that he recognises the need for proper regulation, but we shall obviously not agree about how that will be achieved. On this side of the House we are agreed that it will be achieved only if the regulator is not dependent upon those people in the industry who pay to keep him going. What we heard from the Minister about consumers' interest was partly, satisfactory, but we are all agreed that it is necessary for the consumer to be protected adequately, because otherwise the confidence in our financial institutions, which we all agree is important, will not be restored. Unless that is restored, we are all losers.
We shall have another opportunity to debate these matters when the pensions Bill, as promised in the gracious Speech, is before us. In view of that, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Maximum Number of Judges Order 1994
8.44 p.m.
The Lord Chancellor (Lord Mackay of Clashfern)The Lord Chancellor (Lord Mackay of Clashfern) rose to move, That the draft order laid before the House on 16th November be approved [1st Report from the Joint Committee].
The noble and learned Lord said: My Lords, the draft order is made under Section 1(1) (a) of the Administration of Justice Act 1968 and Section 2(1) of the Supreme Court Act 1981. It relates both to Lords of Appeal in Ordinary and Lords Justices. The Administration of Justice Act 1968 set the maximum number of Lords of Appeal in Ordinary at 11. The order now proposed will increase that number to 12. The statutory ceiling for Lords Justices in England and Wales was increased from 28 to 29 by the Maximum Number of Judges Order 1993. This order will further increase that number to 32.
I shall speak first of the proposed increase in the number of Lords of Appeal in Ordinary. Lords of Appeal in Ordinary are those Members of your Lordships' House appointed to hear and determine appeals. They also sit regularly in the Judicial Committee of the Privy Council.
In addition to their judicial work, Lords of Appeal in Ordinary are increasingly in demand for important public duties. Your Lordships will know, for example, that my noble and learned friend Lord Woolf is heavily engaged in the committee considering access to justice, and my noble and learned friend Lord Nolan has recently been appointed chairman of the Committee on Standards in Public LIfe. That is likely to occupy him fully for some time. Moreover, the Law Lords also play an important role in maintaining international judicial links both with other common law jurisdictions, particularly the Commonwealth and the United States, and with countries which have different legal traditions, especially our partners in the European Union. Those contacts bring considerable mutual benefit to us and the others concerned, and

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we are finding that an increasing number of other countries wish to learn from the British experience. I regard that work as an essential part of the duties of the Lords of Appeal, although it means that from time to time individual Lords of Appeal are not available to sit.
At the same time, the judicial business of your Lordships' House and the Judicial Committee of the Privy Council shows no sign of abating. Indeed, petitions for leave to appeal to the House of Lords this year have already significantly exceeded the total of petitions presented last year and the indications are that the number of appeals presented will show a marked increase over the level of recent years. Moreover, perhaps surprisingly, the number of appeals to the Judicial Committee of the Privy Council remains buoyant.
There are at present 10 Lords of Appeal in Ordinary. In addition, the Lord Chancellor and Peers who have held high judicial office, often retired Lords of Appeal in Ordinary, may also sit judicially in your Lordships' House, and in the Judicial Committee of the Privy Council. Former Lords Justices and senior overseas judges also sit from time to time in the Judicial Committee of the Privy Council. Because of the commitments of the Lords of Appeal I have already mentioned, and for other reasons such as illness, it is often necessary to rely on retired Lords of Appeal to ensure that the judicial business proceeds with due despatch. I should like to express my gratitude to all those who, although no longer holding full-time judicial office, have sat to assist in the discharge of that business.
Your Lordships will also be aware of the Judicial Pensions and Retirement Act 1993 which is expected to come into force in the course of 1995. That Act will introduce a compulsory retirement age of 70 for all new judges first appointed once the Act is in force. It will also prevent any retired judge, including retired Lords of Appeal in Ordinary, from sitting beyond the age of 75, except for the purposes of completion of proceedings. That will in practical terms have the effect of limiting the number of retired Lords of Appeal and other judges who would then be able to sit on judicial business in this House or in the Judicial Committee of the Privy Council, or, as I shall be describing later, in the Court of Appeal.
The Government are concerned to provide the necessary flexibility to ensure that such senior and important courts continue to work effectively as well as to allow, where appropriate, Lords of Appeal in Ordinary to be available to undertake other duties in the public interest. Accordingly, we propose that two further Lords of Appeal in Ordinary be appointed, bringing the total number up to 12.
As I have said, the Administration of Justice Act 1968 at present provides for a maximum of 11 Lords of Appeal in Ordinary. Arrangements for the appointment of an eleventh Lord of Appeal are already in hand. If approved, the order would permit a twelfth appointment to be made.
I turn now to the Court of Appeal. The court is served by the Lord Chief Justice, the Master of the Rolls and the Lords Justices of Appeal. The President of the Family Division and the Vice-Chancellor also sit there from time to time. The Lords Justices form the main judicial strength of the court, although High Court judges sit with them to hear criminal appeals and other cases. Under the Criminal Justice and Public Order Act 1994 there is also provision for circuit judges to sit in the Court of Appeal in certain circumstances. I hope to be able to bring that provision into effect in January 1995.
Since March 1993 there have been 29 Lords Justices in the Court of Appeal. The purpose of the draft order is to further increase that number by three to 32.
The principal reason for seeking an increase is the growing backlog of appeals and lengthening waiting times in both the criminal and civil divisions of the Court of Appeal. In order to alleviate problems in the criminal division an additional court has been sitting since January 1993 and a second additional court since April 1994. I am pleased to inform the House that, for the first time in a number of years, there has been an overall decrease in the length of time a defendant has to wait to have his appeal heard. The number of outstanding appeals has also been reduced over the last two years by over 900 cases to 2,644.
The overall aim is to reduce waiting times to six months for conviction appeals and to three months for sentence appeals. Despite the commendable progress already made, it may well be another year before the number of courts sitting in that division can return to four without disappointing consequences.
Such progress in the criminal division has been to some extent at the cost of the civil division as additional Lords Justices hearing criminal appeals reduces the number available to hear civil cases. It is, however, inevitable that criminal cases should take priority over other cases given that the liberty of the subject is often at stake.
In his review of the legal year, the Master of the Rolls observed that the difficulties in the civil division were unlikely to be overcome by the repeated enlargement of the court. Other measures have already been taken to stem the rise of unheard appeals in the civil division; for example, retired judiciary regularly augment the numbers of Lords Justices sitting in the Court of Appeal. However, as I explained, the Judicial Pensions and Retirement Act will apply equally to judges who sit in the Court of Appeal as to those who sit in the House of Lords or the Judicial Committee of the Privy Council and there will be a similar limitation preventing any retired judges aged 75 or over being able to hear appeals.
Furthermore, in an effort to prevent meritless appeals reaching a full appeal hearing and thus taking up the time of three Lords Justices, the requirement for obtaining leave to appeal was extended in October 1993 to a number of new classes of case. My officials are currently working together with the Administrative Committee of Lords Justices to identify further categories of case that would prove responsive to a

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further extension of the leave filter. The categories have not yet been finalised, but any firm proposals will be put out to consultation in the usual way before implementation. Other possible methods to reduce waiting times are also being considered, including time limits for oral arguments and the increased use of written submissions.
Such work will inevitably take time and the pressures on the civil division are already acute. Across all the categories of appeals the average delay is around nine months. However, the average figure does not give the full picture. Priority cases, particularly those involving children, can be heard within three months, but other non-priority cases might have to wait up to 22 months. Such a level of delay causes difficulties as parties seek to have their cases moved into priority categories, and thereby expedited, if there is a long wait before their appeal can be heard. It follows that the more expedited cases there are the longer the delay for those appeals which are not in the priority category. According to long-term trends, the number of appeals set down is forecast to rise by around 1.5 per cent. each year. If the number of judges is not increased the backlog as we move into the next century will be approaching 3,000 cases, which equates to delays of around two years. Such delays are clearly unacceptable. Assuming that nothing else were done, the appointment of three additional Lords Justices would hold the backlog to around one year.
After careful consideration of the current and forecast workload of the Court of Appeal, I have concluded that three additional appointments are necessary at this time and will assist in the more efficient dispatch of business of the courts and that the House should further discharge its responsibility by approving the draft order. I commend the order to the House. I beg to move.
Moved, That the draft order laid before the House on 16th November be approved [1st Report from the Joint Committee].—(The Lord Chancellor.)
Lord Graham of Edmonton: My Lords, first, I apologise to the House and to the noble and learned Lord for the inability of my noble friend Lord Irvine of Lairg to be present tonight. He has been unexpectedly delayed. He has taken a deep interest in the matter and has raised it on more than one occasion. No animosity has been involved and I know that when he reads what was said by the noble and learned Lord he will be most pleased.
My noble friend will understand the case. I can listen to it and try to grapple with its intricacies. However, I am certain that the noble and learned Lord, Lord Ackner, will add to the good reception that I have given to the order. He too well understands the situation.
I have learnt from a number of quarters and sources that the noble and learned Lord the Lord Chancellor has met an acute need. That need could be eased only in this manner. I am well aware of protocol and of having to be careful before going overboard. I believe
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that the balance and the timing are right. On behalf of my noble friend Lord Irvine and Members on these Benches, I give the order a warm reception.
Lord Meston: My Lords, I too thank the noble and learned Lord and wish to ask only one question. Is he prepared to lift the veil on the possible categories of appeal that are being considered as candidates for which leave might now be required?
Lord Ackner: My Lords, I too welcome the proposed order, which increases the maximum number of Lords in Appeal in Ordinary to 12 and the Lord Justices in the Court of Appeal to 32. I raise only three points on which I should be grateful for my noble and learned friend's comments. The first relates to the adequacy of the increased number of judges in the Court of Appeal. My noble and learned friend referred to the Court of Appeal (Civil Division) Review for 1993–94, copies of which were circulated to all Lords of Appeal past and present. It makes depressing reading. My first point relates to whether three is an adequate number to cope with the present situation.
In the conclusion, the Master of the Rolls states:
"Over the past three years the figures show a consistent and disturbing trend: a high level of appeals set down; a steady and significant increase in the number of applications set down; and a sharp increase in the backlog of unheard appeals and applications. The trend is disturbing because the delay in hearing appeals is already too long, and is perhaps at the upper limit of what is acceptable. If these trends continue and nothing is done, the delay will be altogether unacceptable and may be seen as a denial of justice".
The Master of the Rolls pays tribute, as has my noble and learned friend the Lord Chancellor, to the considerable assistance of retired Lords Justices in dealing with the situation. In the words of the Master of the Rolls, they have given "valuable service". In his report, the Master of the Rolls identifies those retired Lords Justices. They are nine in number. If and when—and I suppose that it is when—the Judicial Pensions and Retirement Act is brought into force, of those nine, four will be immediately disqualified because they are over the age of 75. Of the remaining five, four are approaching 75; some are a year away, some two or three years, but all are approaching 75.
I appreciate that in due course there will be those who will retire from the Court of Appeal and who will, subject to age, make their services available. However, in view of the disturbing observations made by the Master of the Rolls in his report, and in view of the impact of the Act, when it is brought into force, upon the availability of retired Lords Justices to continue to provide such valuable assistance, I wonder whether three is enough to deal with the present depressing situation.
Secondly, my noble and learned friend referred to the fact that, in addition to increasing the number of judges, obviously thought will be given to reducing the time spent on oral argument. The Master of the Rolls says in his conclusions:
"It appears to be inescapable that in this country, as in other common law jurisdictions, steps will have to be taken to curtail the time allowed for oral argument, with greater reliance on

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written submissions. The saving of time in court will of course be off-set by the need to devote more time to perusal of written materials out of court, but experience elsewhere indicates a saving of time and an increased rate of disposal of business overall".
I now turn to the part of the conclusions that I wish to stress:
"In other common law jurisdictions increased reliance on written materials has demonstrated a need for the judges to receive professional legal assistance, usually obtained (at relatively modest expense) from the ablest young law graduates; this also may prove a desirable, if not a necessary, innovation here".
As my noble and learned friend knows, when I was sitting as a Law Lord my opposite number in the Supreme Court of the United States had three assistants to help him. Indeed, each member of the Supreme Court had three such assistants. I believe that the same applies in Canada and Australia. I do not know whether my noble and learned friend can confirm that serious consideration is now being given to the question of providing legal assistants, especially if we are to move more towards the restriction on oral argument.
My third and last point relates to another disturbing feature of the report. On page 9, there is a reference to "Figure 7", which shows,
"the total number of applications set down in the year under review and, in the lower line, the number of applications made by litigants representing themselves".
The report then continues:
"It will be seen that in 1989–90 scarcely more than one applicant in ten acted in person, whereas in the past year the proportion of such applicants has approached one third of the total".
The Master of the Rolls observes:
"In most instances litigants representing themselves are inevitably unfamiliar with legal procedures and lack the expertise needed to prepare the case for hearing by the Court, to give a clear account of the relevant narrative, to identify the legal issues for decision and to present argument to the Court".
The Master of the Rolls concludes:
"While the staff of the Court do their best to give guidance on procedure, and helpful explanatory leaflets have been prepared, the conduct of cases by personal litigants greatly increases the burden on the lawyers and administrative staff who work in the Civil Appeals Office and on the members of the Court in seeking to elicit the relevant facts and identify the relevant issues".
It must be the case that this, to quite an extent, is the product of the very savage cuts in legal aid. I wonder whether my noble and learned friend will bear that in mind when considering to what extent those cuts can be ameliorated.
9 p.m.
The Lord Chancellor: My Lords, I am grateful for the support from all speakers for the Motion that I have moved. It remains for me to seek to deal with the matters raised. The noble Lord, Lord Meston, raised the question of whether I can give any information about the classes of case being considered as regards the application of a filter. As is known, we have already dealt with one tranche of that.
So far as concerns the second tranche, I am considering it at present with the Administrative Committee of Lords Justices. Indeed, I mentioned that
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my officials have had a meeting with the committee. Whenever we reach a view about what classes of case are appropriate, I shall put out a consultation document which will set them out in detail and ask for views upon them. I shall do so before operating the powers given under the statute to modify the classes of case which require a filter. At the present stage of the discussion, it would be premature to reach any conclusion. In fact, I have not reached any conclusion myself on the matter, as I am still in discussion with the Lords Justices.
My noble and learned friend Lord Ackner raised three questions. I take the view that, so far as concerns the present situation, the increase by three judges is reasonable. We shall of course have to keep the situation in the Court of Appeal under review and the effect of any other action that the court may think it proper to take in relation to the matters with which the Master of the Rolls dealt. The Master of the Rolls made it clear that, in his view, repeated extensions of the size of the court would not be a suitable solution to all the problems experienced by the court. I believe it right at present that we should ask for three judges and then see how matters develop.
Secondly, my noble and learned friend pointed out that the Master of the Rolls raised the question in his report of curtailing oral argument. I have already made arrangements for legally qualified staff to be in the office of the civil division of the Court of Appeal. That was an innovation of a year or two back. Obviously, the precise number of such staff at any time will also be a matter which we shall keep under review.
My noble and learned friend referred to his opposite number in the Supreme Court of the United States when he was a Lord of Appeal in Ordinary, who had three assistants. It is fair to say that the number of cases disposed of by the Supreme Court in the US in a year is rather more, although the method of working is different. I certainly intend to keep under review the legally qualified members of the staff of the civil division in the Court of Appeal in the light of developments that the court may decide upon in relation to the issue of curtailing oral argument.
In so far as the third point is concerned, the Master of the Rolls has pointed to an increase in the proportion of those who represent themselves, as between 1989 and the present day. I do not think that that is attributable to any substantial extent to the changes in eligibility for legal aid which were made last year. I think that this is a tendency which has a number of causes. I certainly intend to keep very closely under review the question of whether or not the legal aid changes have affected this matter. However, one of the complaints that I have heard from the previous holder of the office of Master of the Rolls was that he found from time to time that legal aid was granted too readily for appeals that were not with merit in the Court of Appeal and he wondered about steps to deal with that. It may well be that steps to deal with that have had an effect on the number of people who represent themselves in this manner.

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However, these are all matters that I would wish to keep under review but, in the meantime, the order, the draft of which is before your Lordships, is, I think, agreed on all sides to be an important step in the right direction. I renew my Motion.
On Question, Motion agreed to.

Legal Aid Advisory Committee (Dissolution) Order 1994
9.10 p.m.
The Lord Chancellor The Lord Chancellor rose to move, That the draft order laid before the House on 22nd November be approved [1st Report from the Joint Committee].
The noble and learned Lord said: My Lords, the purpose of this order is to implement the dissolution of the Legal Aid Advisory Committee as provided for under Section 35(6) of the Legal Aid Act 1988.
The Legal Aid Advisory Committee was established in 1949. Its purpose was to comment on the way in which the Law Society administered the legal aid scheme, and to provide advice and recommendations to the Lord Chancellor on legal aid. Following the establishment of the Legal Aid Board in 1989 under the Legal Aid Act 1988 to administer the legal aid scheme, the board being subject to the regulatory regime appropriate to a non-departmental public body, a significant element of the committee's role came to an end. However, I concluded that it would not be right immediately to bring the committee to an end and it was continued in being in order to assess the extent to which there was a continuing useful role for it to play.
I have reviewed developments since 1989 and have concluded that there is no longer a need for a separate Legal Aid Advisory Committee. I am glad to take this opportunity to acknowledge the valuable work the committee has done during the course of its existence. I am grateful to all past and present members for the work they have done.
The situation in the legal aid field has changed very greatly since the establishment of the Legal Aid Advisory Committee. There is now a wide range of bodies and organisations with an interest in, and knowledge and experience of, the operation of the legal aid scheme. I regularly receive comments on developments from these bodies and organisations. I always welcome comments from any quarter on the operation of the scheme.
The Legal Aid Board is required to carry out the objectives set out in the Management Statement I published in January this year. These include the requirement to advise me from time to time on whether the scheme as a whole is meeting my objectives, and whether the way in which it is presently structured leads to the most effective and efficient use of the resources which the Government have allocated to legal aid. The board is also required inter alia regularly to consider whether any structural changes should be made, to review its arrangements for ensuring a quality service at a value-for-money price, and to advise me on any particular problems
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relating to access to justice. This gives the board a remit which is more than wide enough to embrace that previously held by the advisory committee.
I have referred in the past to my intention to extend the programme of research into legal aid matters. The Legal Aid Board is undertaking a number of projects: on methods of delivery; on non-solicitor agencies franchising; on refusals of contributory legal aid; on models predicting likely need for legal services, and on the internal corporate information strategy to support, among other things, strategic planning. The Legal Aid Board is also planning research on outcome measures in franchising and is planning a public opinion survey on priorities for legal aid expenditure and a survey of users of legal aid (applicants and assisted persons) under Citizen's Charter initiatives. This programme demonstrates that the board is already pursuing the kind of work that at one time would have been more appropriate for the advisory committee.
The involvement in legal aid matters of the Home Affairs Select Committee in another place, which has developed in the years since the establishment of the Legal Aid Advisory Committee, provides an additional independent perspective on the operation of the legal aid scheme. Overall, I am satisfied that the advice available to me from independent bodies and organisations, together with that provided by the Legal Aid Board in fulfilment of its objectives, gives me access to the full range of pertinent views and opinions and that there is no longer a need for a separate Legal Aid Advisory Committee.
As I said, I am very grateful to those who have served on the committee over the years. Much of its advice has been extremely valuable. I believe that in the changed circumstances the need for a separate Legal Aid Advisory Committee has come to an end. I beg to move.
Moved, That the draft order laid before the House on 22nd November be approved [1st Report from the Joint Committee]. —(The Lord Chancellor.)
Lord Graham of Edmonton: My Lords, again, I apologise for the absence of my noble friend. As the noble and learned Lord the Lord Chancellor is aware, matters relating to legal aid are not the prerogative exclusively of any particular Bench or any particular experience in the House. They are looked on by all Members of the House as matters in which they have a deep concern.
I listened to what the noble and learned Lord said as a rationale for the move that is proposed. As a layman I can appreciate not only the reason for extinguishing this particular body, but also, in the light of the care that he took to explain the structure which remains in existence and which is capable of doing so much more than I could ever have thought needed to be done, I am satisfied of the sense of what is proposed. Therefore, from these Benches we give the order a warm welcome.
Lord Meston: My Lords, I too should like to thank the noble and learned Lord for his full and careful explanation.

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I also wish to pay tribute to the high quality of the work which has been done by the advisory committee, and to the valuable reports provided by the committee giving insight into the practical operation of the legal aid scheme over many years.
The Lord Chancellor: My Lords, I am grateful to both noble Lords who have spoken for the
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understanding that they have shown. It was not without a good deal of thought that I decided to bring this Motion before your Lordships. I am grateful that, having done so and explained the reasons, your Lordships have been so kind as to express support. I commend the order to the House.
On Question, Motion agreed to.
House adjourned at fifteen minutes past nine o'clock.